IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
August 5, 2002 Session
ARTHUR STIGALL v. BRONSON M. LYLE, ET AL.
Appeal from the Chancery Court for Houston County
No. 5-365 Leonard W. Martin, Judge
No. M2001-00803-COA-R3-CV - Filed February 4, 2003
The plaintiff filed this action in the Chancery Court of Houston County seeking to quiet title to a
parcel of property located there. The court granted the defendants’ Tenn. R. Civ. P. 12.02 motion
to dismiss the plaintiff’s complaint, and imposed sanctions pursuant to Tenn. R. Civ. P. 11.
Although the appellant raises legitimate issues as to the grounds cited for dismissing the complaint,
we nevertheless affirm, finding that the complaint conclusively shows that the plaintiff has no
colorable title to the subject property.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed and Remanded
BEN H. CANTRELL, P.J., M.S., delivered the opinion of the court, in which WILLIAM B. CAIN , J. and
JOHN H. GASAWAY, III, SP . J., joined.
Arthur Stigall, Sacramento, California, Pro Se.
Charles N. Griffith, Waverly, Tennessee, for the appellees, Bronson Lyle, Christina R. Lyle, and
Genie V. Dixon.
David B. Herbert and Julie Bhattacharya Peak, Nashville, Tennessee, for the appellee, Robert Martin,
Dorothy Martin, Jeffery J. Garland, and Misty L. Garland.
OPINION
I.
The following facts are based on the complaint and the exhibits attached to it:
M.B. Edwards owned a 100 acre tract of land in Houston County. Beginning in 1982, the
Internal Revenue Service assessed Mr. Edwards with a substantial amount of back taxes. On May
28, 1983, Mr. Edwards conveyed the Houston County property to the M.B. Edwards Trust located
at 5792 Montclair Avenue, Marysville, California.
In July of 1995, the IRS filed notice of a federal tax lien in the Register’s Office of Houston
County, claiming a lien on the property of “The M.B. Edwards Trust, Individually & Collectively
as Nominee, Alter Ego or Transferee of Marvin B. Edwards.” On August 31, 1995, the IRS levied
on all of Mr. Edwards’ property, including the Trust property, and gave notice that the Houston
County property would be sold by sealed bids, to be opened on October 30, 1995. Bronson Lyle was
the successful bidder and, on May 8, 1996, the Kentucky-Tennessee District Director of the Internal
Revenue Service quitclaimed the property to Mr. Lyle. Some of the property has subsequently been
conveyed to the other defendants in this case. The Trust took no action on its own to contest the sale
of its property or to have the sale set aside.
Later in 1996, Mr. Edwards filed suit in the United States District Court for the Eastern
District of California against the United States and Mr. Lyle seeking to set aside the sale and have
the property restored to the M.B. Edwards Trust. The district court granted summary judgment to
the United States, finding that Mr. Edwards individually did not have standing to prosecute the
action, since he did not claim any interest in the property. The Ninth Circuit affirmed the dismissal
on October 27, 1997.
On February 8, 2000, two trustees of the M.B. Edwards Trust executed a deed conveying the
Houston County property to the plaintiff. One of the trustees had appeared as Mr. Edwards’ lawyer
in 1999, in connection with the IRS proceedings. The plaintiff registered the deed in Houston
County on October 20, 2000 and filed this action to quiet title on the same day. The complaint
describes a host of failures by the IRS to comply with the statutes and regulations that govern the
IRS’s power to seize property and to sell it for satisfaction of a tax lien. But the entire complaint is
based on the allegations that the property was owned by the Trust and not by the delinquent taxpayer,
and that the plaintiff was the successor in title. The plaintiff also filed a notice of a lis pendens lien
in the Houston County Register’s Office.
II.
THE PROCEEDINGS IN THE TRIAL COURT
All the defendants filed motions to dismiss on multiple grounds. The chancellor granted
motions based on the grounds of res judicata and statute of limitations. On appeal, the plaintiff
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correctly points out that the prior federal cases did not decide the issue of title to the property.
Therefore, he asserts that the decisions in those cases are not a bar to his claim of title. We agree
with the plaintiff on that issue. The doctrine of res judicata has been described in the following
manner:
“Res judicata may be successfully pleaded when a judgment on the merits
exhausts or extinguishes the cause of action on which it was based, and is an absolute
bar to a subsequent suit between the same parties upon the same cause of action, and
concludes such parties and their privies not only as to all matters that were actually
put in issue and determined, but also as to all matters which might have been put in
issue and determined.”
National Cordova Corp. v. City of Memphis, 380 S.W.2d 793, 796 (Tenn. 1964). Not only did the
federal court fail to reach the question of title, its essential holding was that Mr. Edwards lacked the
standing to ever raise that issue. Therefore, the decision in that case is not a bar to the plaintiff’s
claim here. See Goeke v. Woods, 777 S.W.2d 347 (Tenn. 1989).
As to the statute of limitations defense, the defendants insist that the record clearly shows a
failure to take any timely action to contest the IRS’s seizure of the property or to redeem it once it
had been sold. See 26 U.S.C. 6532 and 26 U.S.C. 7426 (providing a nine-month window for a party
other than the taxpayer to challenge a wrongful levy.) We agree that nothing was done by the Trust
during the nine-month period after the levy. But reading the complaint in the light most favorable
to the plaintiff, as we must do when the complaint is tested by a Rule 12.02(6) motion, Harvey v.
Ford Motor Credit Co., 8 S.W.3d 273 (Tenn. Ct. App. 1999), we think the gravamen of the
complaint is that, for the manifold transgressions of the IRS, the quitclaim deed to the Lyles was
void. Therefore, no party was required to take any action with respect to it. While that view of the
complaint may be over generous, we think that granting the motion to dismiss on the grounds of the
statute of limitations was premature.
III.
THE PLAINTIFF ’S TITLE
The defendants also raised the defense that the face of the complaint showed that the
plaintiff’s deed was void. Although the chancellor did not rule on that defense, we think the defense
is well taken and the complaint must be dismissed to prevent needless litigation, and to prevent
prejudice to the judicial process. See Tenn. R. App. P. 13(b); Panzer v. King, 743 S.W.2d 612
(Tenn. 1988).
From ancient times the law would not allow the sale of a pretended title in lands. Our current
laws respecting champertous contracts can be traced at least as far back as 32 Henry VIII c. 9.
Robertson & Hobbs v. Cayard, 111 Tenn. 356, 363 (1903). These laws are now embodied in two
statutes, Tenn. Code Ann. § 66-4-201 and 202. They provide:
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66-4-201. Champertous sales of pretended interest prohibited. – No person shall
agree to buy, or to bargain or sell any pretended right or title in lands or tenements,
or any interest in such pretended right or title.
66-4-202. Sale without possession. – Any such agreement, bargain, sale, promise,
covenant or grant shall be utterly void where the seller has not personally, or by the
seller’s agent or tenant, or the seller’s ancestor, been in actual possession of the lands
or tenements, or of the reversion or remainder, or taken the rents or profits for one
(1) whole year next before the sale.
When the facts are disclosed showing the application of these statutes, any suit at law or
equity for the recovery of the lands affected, “shall be forthwith dismissed, with costs.” Tenn. Code
Ann. § 66-4-203. Bona fide sales by a non-resident are not affected, but if the lands are adversely
held at the time of the sale “by deed, demise, or inheritance” the sale is not bona fide. Tenn. Code
Ann. § 66-4-204. “The uniform construction of the Act . . . has been, that a sale by one out of
possession, of land adversely held, is void. It is immaterial whether the vendors title be valid or
invalid.” Kincaid v. Meadows, 40 Tenn. 188 at 192 (1859).
The facts alleged in the complaint show that this case falls squarely within the application
of the statutes. The plaintiff received a deed from a grantor who was not in possession of the
property described in the deed and who knew that the property had been conveyed to third parties
by the IRS deed. The third parties were in actual possession of the property under their deeds.
Therefore, the plaintiff’s deed was utterly void.
IV.
RULE 11 SANCTIONS
Tenn. R. Civ. P. 11.02 provides:
By presenting to the court (whether by signing, filing, submitting, or later
advocating) a pleading, written motion, or other paper, an attorney or unrepresented
party is certifying that to the best of the person’s knowledge, information, and belief,
formed after an inquiry reasonable under the circumstances, –
(1) it is not being presented for any improper purpose, such as to harass or to
cause unnecessary delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted by
existing law or by a nonfrivolous argument for the extension, modification, or
reversal of existing law or the establishment of new law;
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(3) the allegations and other factual contentions have evidentiary support or, if
specifically so identified, are likely to have evidentiary support after a reasonable
opportunity for further investigation or discovery; and
(4) the denial of factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on a lack of information or belief.
For a violation of this rule the court is authorized to impose sanctions which may include
attorneys’ fees and other expenses. Rule 11.03(2). The trial judge made the following findings:
1. The plaintiff, Arthur Stigall, is a citizen in the State of California. He is
attempting to litigate his cause pro se without local appearance in Court by using the
mails or by telephone. Since the prior hearing of December 12, 2000, plaintiff has
filed further voluminous pleadings and attempted to speak personally with the Court
ex parte by telephone which the Court finds is inappropriate. The Court has declined
to speak with the plaintiff and stated that the plaintiff must observe and abide by the
Tennessee Rules of Civil Procedure and applicable statutes.
2. The Court finds the claims of lien filed against all defendants by plaintiff were
unwarranted, unreasonable and extremely disruptive to their business and personal
financial affairs. This disruption continues as long as this case continues. However,
the Court cannot allow citizens of this state to have their lives placed in turmoil
endlessly by a person residing in another state merely filing paper writings without
substance or merit. The Court, therefore, deems that it must have some method to
deal with these circumstances. The Court finds that certain sanctions pursuant to
Tennessee Rules of Civil Procedure 11 must be entered.
3. The Court finds that it wishes to establish the least onerous sanctions which
will protect these defendants from further undue costs and stress of continuous
litigation which may be unmeritorious and unreasonable causing additional
aggravation, expenses and concern to the defendants.
Among other sanctions, the court ordered the plaintiff to pay a total of $6,250 in attorneys’
fees to the defendants. Although the plaintiff contests the award on other grounds, he does not
dispute the findings on which the award was based.
This court reviews the trial court’s decision to impose sanctions under an abuse of discretion
standard, Andrews v. Bible, 812 S.W.2d 284 (Tenn. 1991), and the trial judge’s decision is entitled
to great weight on appeal. Krug v. Krug, 838 S.W.2d 197 (Tenn. Ct. App. 1992).
Although pro se litigants are nearly always accorded more leniency than trained attorneys,
they are not excused from compliance with our rules of procedure. Kaylor v. Bradley, 912 S.W.2d
728 (Tenn. Ct. App. 1995). We believe that under the circumstances of this case the sanctions
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imposed by the trial judge were warranted. Using a champertous deed to set up and file a lis pendens
lien on the defendants’ property and then filing an avalanche of motions and other pleadings exhibits
the type of recklessness that Rule 11 is designed to redress.
V.
The defendants also seek damages for a frivolous appeal. See Tenn. Code Ann. § 27-1-122.
We decline to hold that the appeal is frivolous and, therefore, deny the defendants’ request.
The judgment of the trial court is affirmed. The cause is remanded to the Chancery Court
of Houston County for any further proceedings necessary. Tax the costs on appeal to the appellant,
Arthur Stigall.
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BEN H. CANTRELL, PRESIDING JUDGE, M.S
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