Silva v. Silva , 437 P.3d 593 ( 2018 )

2018 UT App 210THE UTAH COURT OF APPEALS
DAVID SILVA,
Appellee,
v.
BONNIE SILVA,
Appellant.
Opinion
No. 20160171-CA
Filed November 8, 2018
Third District Court, Salt Lake Department
The Honorable Robert P. Faust
No. 140908706
J. Spencer Ball, Attorney for Appellant
Shawn D. Turner, Attorney for Appellee
JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
in which JUDGES GREGORY K. ORME and DAVID N. MORTENSEN
concurred.
CHRISTIANSEN FORSTER, Judge:
¶1 Bonnie Silva appeals the district court’s denial of her
motions to set aside a default judgment and a sheriff’s sale
following that judgment. She also challenges the district court’s
award of attorney fees. We vacate the district court’s rulings and
remand for further proceedings.
BACKGROUND
¶2 Bonnie Silva and David Silva divorced in 2010. The
marital estate included interests in fifteen parcels of real
property—four properties held jointly, one property held by
Silva v. Silva
David, and ten properties held by Bonnie. 1 The decree allocated
the properties and ordered the parties to execute quitclaim deeds
within thirty days, conveying their interests in the properties to
one another as specified in the decree. If either party failed to
execute a quitclaim deed, the divorce decree authorized the
other party to seek a court order to transfer title. One of the
properties awarded to David was a residential property located
on Dennis Drive in West Valley City, Utah (the Dennis Drive
Property).
¶3 In June 2010, pursuant to the divorce decree, Bonnie
executed a quitclaim deed as “Grantor Bonnie Moore, now
known as Bonnie Silva,” purportedly conveying the Dennis
Drive Property to David. But when David attempted to record
the deed, he discovered that “Bonnie Moore[,] as Trustee for the
Consolidated Trust,” actually held title to the Dennis Drive
Property. He further discovered that one week before he had
filed for divorce in September 2008, Bonnie had conveyed the
Dennis Drive Property and other properties then in her name to
herself and her daughters, K.V. Lum and R. Carter, as trustees of
a trust known as the Consolidated Trust. After learning these
facts, David sent a revised quitclaim deed to Bonnie, but she did
not sign and return it as requested. Several months later, Bonnie,
as a trustee of the Consolidated Trust, again conveyed the
Dennis Drive Property and other properties to Lum, as trustee of
the Consolidated Trust.
¶4 In October 2010, David filed a Motion for Contempt with
the district court. Because he claimed he could not locate Bonnie,
David filed a Motion for Alternative Service, which the court
granted. The district court held an evidentiary hearing and
entered a default judgment finding Bonnie in contempt for
failing to convey the Dennis Drive Property to David. However,
1. Because Bonnie and David share a last name, we refer to them
by their first names throughout this opinion. We intend no
disrespect by this apparent informality.
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the court left open a window during which Bonnie could cure
the contempt. If Bonnie did not convey the Dennis Drive
Property to David within thirty days, the court would enter a
$219,000 judgment against her. Bonnie did not convey the
property to David during this time. A few months later, Lum, as
a trustee of the Consolidated Trust, conveyed title to the Dennis
Drive Property to Carter, as a trustee of the Consolidated Trust.
The district court then entered a contempt judgment against
Bonnie, reducing slightly the $219,000 by amounts David owed
to Bonnie under the divorce decree.
¶5 The following month, David instituted this action against
Bonnie and her daughters alleging fraudulent conveyance and
seeking to quiet title to the Dennis Drive Property. David filed a
motion for alternative service recounting his prior unsuccessful
efforts to serve Bonnie. David asserted that the process server
had attempted personal service at Bonnie’s last known address
four separate times. The district court ordered alternative service
by publication, which David accomplished.
¶6 Bonnie did not answer the complaint. The district court
clerk consequently entered a default certificate against Bonnie,
and the court ordered an evidentiary hearing on damages.
Concerned that Bonnie may have received inadequate notice of
the hearing, the district court rescheduled the hearing and
required additional service on Bonnie. David attempted service
by mailing copies of the notice of hearing to what David claimed
was Bonnie’s last known address by both regular and certified
mail. David also attempted personal service whereby the process
server left the notice at Bonnie’s last known residence on three
separate occasions. David then completed service by publication
again.
¶7 Bonnie did not appear at the hearing on damages. In its
Findings of Fact and Conclusions of Law, the district court
concluded that “Service of Process of the Complaint and notice
of the evidentiary hearing on damages were in accordance with
the Rules of the Court, the Statutes of Utah, and the
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Constitutional requirements of due process.” The district court
also determined that Bonnie had fraudulently conveyed the
Dennis Drive Property and her other properties to the
Consolidated Trust. Accordingly, the district court ruled that the
contempt judgment entered in the divorce action attached to the
properties, that Bonnie and her daughters were enjoined from
transferring or encumbering the properties, and that David
“may levy execution on the properties . . . and sell the amount of
the property necessary to satisfy the judgment.” Finally, the
district court awarded attorney fees and costs to David. The
district court thus entered default judgment against Bonnie in
the amount of the contempt judgment, now attached to Bonnie’s
properties. The court also awarded costs and attorney fees
totaling nearly $50,000. The district court clerk subsequently
issued a writ of execution on three of Bonnie’s properties,
including the Dennis Drive Property.
¶8 Later that month, Bonnie’s counsel entered an appearance
in the district court and filed a motion pursuant to rule 60(b)(1)
of the Utah Rules of Civil Procedure seeking to set aside the
default judgment on the basis of excusable neglect and to quash
the writ of execution. The district court held a hearing, which
Bonnie and her counsel attended. At that hearing, Bonnie
maintained that the default judgment should be set aside on the
ground of excusable neglect because she did not receive actual
notice of the action and service was insufficient under the
circumstances. Bonnie acknowledged that service complied with
the law, but she argued that David knew where Bonnie was
located and could easily have contacted her to give her actual
notice of his claims.
¶9 Bonnie filed an affidavit with her rule 60(b) motion and a
second affidavit with her reply motion. In her first affidavit,
Bonnie alleged that she had not received notice of the current
action against her. She further alleged that she received a call
from David notifying her that “something was wrong with the
quitclaim deed” but that “David never indicated to [her] in that
telephone call that there was any court proceeding.” In her
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second affidavit, Bonnie alleged that David knew of various
means of contacting her, including her two email addresses or
through their respective children and the renters of their
properties. David did not refute these allegations.
¶10 The district court denied Bonnie’s motion to set aside
based upon excusable neglect on the ground that “service [of the
notice] and the resulting default were appropriate.” The court
reached this conclusion, in part, because the court determined
Bonnie provided no evidence—despite her two affidavits—
supporting her assertions that David knew where Bonnie was
located and that she did not receive actual notice of the
proceedings. And although the court recited the law relative to
excusable neglect, the court did not address excusable neglect in
its analysis. Similarly, the court denied the motion to quash for
Bonnie’s failure to provide evidence of irreparable harm.
¶11 Four days later, the Dennis Drive Property and the other
two properties subject to the writ of execution were sold at a
sheriff’s sale. Bonnie responded with a motion for a temporary
restraining order (TRO), a motion to void the execution sale, and
a motion to join the sale purchasers as parties to the action. After
a hearing, the district court denied the TRO on the ground that
Bonnie had failed to meet the required elements for relief. The
court denied the motion to join the purchasers on the ground
that “[Bonnie] cites rules that apply before a judgment is made
and are not applicable for a case as this one where judgment was
entered.” The court noted that “even if there was no judgment in
this case, there is no basis, claim, or cause of action asserted
against the purchasers.” The court denied the motion to void the
execution sale on the ground that the court had already ruled at
the TRO hearing that the notice of sale was properly served.
¶12 Bonnie appealed the district court’s denial of her motions
to set aside the default judgment and the sheriff’s sale, and the
district court’s award of attorney fees to David. We issued an
opinion in this matter on July 28, 2017. See Silva v. Silva, 2017 UT
App 125, 402 P.3d 36, vacated, Jan. 9, 2018. We subsequently
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granted a petition for rehearing, vacated that opinion, and
reheard the matter.
ISSUES AND STANDARDS OF REVIEW
¶13 Bonnie asserts two claims of error on appeal. 2 First, she
contends that the district court abused its discretion in denying
her motion to set aside the default judgment. We generally
review a district court’s denial of a rule 60(b) motion under an
abuse of discretion standard. Utah Res. Int’l, Inc. v. Mark Techs.
Corp., 2014 UT 60, ¶ 11, 342 P.3d 779.
¶14 Second, Bonnie contends that the district court abused its
discretion in denying her motion to set aside the sheriff’s sale,
claiming she lacked notice and pointing to irregularities in the
sale. “A district court’s decision to set aside a sheriff’s sale is to
be reviewed for an abuse of discretion.” Meguerditchian v. Smith,
2012 UT App 176, ¶ 9, 284 P.3d 658 (quotation simplified).
ANALYSIS
I. Rule 60(b) Motion
¶15 Bonnie first contends that the district court abused its
discretion in denying her rule 60(b) motion to set aside the
default judgment. “Rule 60(b) of the Utah Rules of Civil
Procedure provides a mechanism for a party to obtain relief from
a final order or judgment . . . .” Asset Acceptance LLC v. Stocks,
2016 UT App 84, ¶ 13, 376 P.3d 322. “[A] movant is entitled to
2. Bonnie also asserts that the attorney fees award associated
with the default judgment was not supported by findings
regarding the reasonableness of the award. Because we vacate
the district court’s decision based on Bonnie’s first argument, we
do not address her attorney fees argument in detail.
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have a default judgment set aside under [rule] 60(b) if (1) the
motion is timely; (2) there is a basis for granting relief under one
of the subsections of 60(b); and (3) the movant has alleged a
meritorious defense.” 3 Menzies v. Galetka, 2006 UT 81, ¶ 64, 150
P.3d 480.
¶16 With respect to the second requirement, Bonnie asserted
excusable neglect as a basis for relief. See Utah R. Civ. P. 60(b)(1).
The excusable neglect inquiry is a flexible one in which the
district court is granted broad discretion “to consider all relevant
factors and give each factor the weight that it determines it
deserves.” Jones v. Layton/Okland, 2009 UT 39, ¶¶ 17, 25, 214 P.3d
859. In such equitable inquiries, “the question is always whether
the particular relief sought is justified under principles of
fundamental fairness in light of the particular facts.” Id. ¶ 17.
Courts are generally encouraged to be “indulgent toward setting
a judgment aside where there is reasonable justification or
excuse for the defendant’s failure to answer and when timely
application is made.” Miller v. Martineau & Co., 1999 UT App
216, ¶ 25, 983 P.2d 1107 (quotation simplified). Indeed, upon a
timely motion to set aside, “it is quite uniformly regarded as an
abuse of discretion to refuse to vacate a default judgment where
there is reasonable justification or excuse for the defendant’s
failure to appear.” Arbogast Family Trust v. River Crossings, LLC,
2008 UT App 277, ¶ 23, 191 P.3d 39 (quotation simplified), aff’d,
2010 UT 40, 238 P.3d 1035.
¶17 Here, the district court did not address whether Bonnie’s
failure to respond to the complaint was due to excusable neglect.
Instead, the court’s analysis focused only on the propriety of its
order authorizing alternative service. In its decision denying
Bonnie’s motion to set aside, the court observed that the court
had approved the alternative service and that Bonnie’s counsel
3. Because we conclude that the district court failed to properly
analyze Bonnie’s excusable neglect argument—the basis she
alleged for relief—we do not consider the other requirements.
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had “admitted at the hearing that service upon [her] was legally
proper.” On this basis, the district court concluded that “service
and the resulting default were appropriate.” But the question
before the court was not whether service or entry of default
judgment was technically appropriate. Indeed, despite proper
service and entry of an otherwise appropriate default judgment,
parties under our rules are afforded an opportunity to set a
judgment or final order aside. The correct inquiry, then, is
whether Bonnie’s lack of actual notice constitutes a reasonable
justification to set aside the default “under principles of
fundamental fairness in light of the particular facts.” Jones, 2009
UT 39, ¶ 17. While the particular circumstances of service of
process may shed light on whether Bonnie’s failure to respond
was reasonable and excusable, the district court failed to address
this issue.
¶18 Bonnie argues that David had “many means at his
disposal to contact [her] to give notice that he was suing her,
including calling and emailing her.” Her affidavit alleges that he
knew “her two active email addresses, her telephone
number, . . . her children, and many other means he had after 13
years of marriage” to contact her. If Bonnie’s unrefuted
allegations are to be believed, then David, contrary to his
representations to the court when he filed his motion for
alternative service, had the ability to contact Bonnie through
means that would have been more likely to reach her. If this is
the case, then there was likely “reasonable justification” for
Bonnie’s failure to answer. See Arbogast Family Trust, 2008 UT
App 277, ¶ 23.
¶19 The district court did not address whether these
circumstances made Bonnie’s failure to respond excusable.
Rather, the court merely ended its inquiry upon determining
that (1) the alternative service was adequate and (2) Bonnie
admitted the technical legality of that service of process. Because
this determination did not address Bonnie’s excusable neglect
argument, we vacate the district court’s ruling and remand for
further proceedings.
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II. Sheriff’s Sale
¶20 Bonnie also challenges the district court’s refusal to set
aside the sheriff’s sale of three of her properties to satisfy the
judgment. A court “may set aside a sheriff’s sale where (1) a
debtor’s property is sold at a grossly inadequate price and
(2) there were irregularities during the sale that contributed to
the inadequacy of price or circumstances of unfairness during
the redemption period caused by the conduct of the party
benefitted by the sale.” Pyper v. Bond, 2011 UT 45, ¶ 15, 258 P.3d
575.
¶21 Bonnie points to two irregularities in the sale that she
believes justify setting it aside. First, she asserts that she and her
attorney did not receive proper notice of the sale as outlined by
rules 69B(b), 64(a)(10), and 5 of the Utah Rules of Civil
Procedure. Second, she points out that the sheriff’s sale disposed
of all three properties together rather than as separate parcels.
She asserts that this is contrary to rule 69B(d), which directs,
“The property shall be sold in such parcels as are likely to bring
the highest price. Severable lots of real property shall be sold
separately.” Utah R. Civ. P. 69B(d). Bonnie maintains that these
irregularities contributed to a grossly inadequate sale price,
pointing out that the Dennis Drive Property alone was valued at
$219,000 at “the bottom of the real estate depression in Utah,”
yet the Dennis Drive Property plus two other single family
dwellings were sold together at auction for only $186,000 in
2016.
¶22 In its ruling on Bonnie’s motion to set aside the default
judgment, the district court did not fully address her arguments.
The ruling states simply that the court had “already addressed at
the previous hearings the issue of notice of the sale (not required
to be served on counsel and notice of sale not done under Rule
5).” From what we can glean from the record, this ruling seems
to be based on the court’s reading of rule 69B(b)(3), which states
that “[i]f the property is real property, the officer shall post
written notice” of the sale. Id. R. 69B(b)(3). The district court
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appears to have taken this statement in the rule to mean that
only posting of notice, rather than service on the defendant
pursuant to rule 5, is required under 69B. But in examining the
structure of rule 69B(b), this is not the case.
¶23 The rule first states, “The officer shall set the date, time
and place for sale and serve notice thereof on the defendant . . . .” Id.R. 69B(b) (emphasis added). The rule then goes on to state, “The
officer shall publish notice of the date, time and place of sale as
follows . . . .” Id. Rule 69B(b)(3), on which the district court
appears to have relied for its determination that “if it’s real
property . . . [t]he manner [of service] is different,” is only a
subpart of subsection (b) and describes the manner in which
notice is to be published with respect to real property. It does not
negate the requirement in the first sentence of subsection (b)
regarding service upon the defendant. Rule 64(a)(10) defines
“serve” for purposes of rule 69B as “any method of service
authorized by Rule 5,” id. R. 64(a)(10), and rule 5 requires service
upon a party’s attorney where the party is represented by
counsel, id. R. 5(b). Thus, the district court’s determination that
service upon Bonnie’s attorney was not required was erroneous.
¶24 Nevertheless, the defect in service does not necessarily
mean that the sheriff’s sale should be set aside. See Pyper, 2011
UT 45, ¶ 15 (stating that a sheriff’s sale may be set aside where
the price is “grossly inadequate” and there are “irregularities
during the sale that contributed to the inadequacy of price or
circumstances of unfairness”). Further analysis is needed to
make this determination. Because the district court erred in its
determination regarding notice and did not fully address
Bonnie’s other arguments, we remand for the district court to
address those arguments.
III. Attorney Fees on Appeal
¶25 Finally, both parties request an award of attorney fees
incurred on appeal. Bonnie contends that “[e]quity requires that
[she] be granted her attorney’s fees for having to make this
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appeal.” David counters that even if Bonnie is “able to prevail on
appeal, [she] would not be entitled to [her] fees,” because she
was “not awarded fees below.” David also requests attorney fees
on appeal because he was awarded fees in the default judgment.
¶26 “When a party is entitled to attorney fees below and
prevails on appeal, that party is also entitled to fees reasonably
incurred on appeal.” Jordan Constr., Inc. v. Federal Nat’l Mortgage
Ass’n, 2017 UT 28, ¶ 71, 408 P.3d 296 (quotation simplified). “In
Utah, attorney fees are awardable only if authorized by statute
or by contract.” Jones v. Riche, 2009 UT App 196, ¶ 1, 216 P.3d 357(quotation simplified). “However, in the absence of a statutory
or contractual authorization, a court has inherent equitable
power to award reasonable attorney fees when it deems it
appropriate in the interest of justice and equity.” Stewart v. Utah
Public Service Comm’n, 885 P.2d 759, 782 (Utah 1994). “Courts
have exercised that inherent power in several categories of
cases,” such as “when a party acts in bad faith, vexatiously,
wantonly, or for oppressive reasons.” Id. (quotation simplified).
¶27 The parties present no contract or statute authorizing
attorney fees under the circumstances. Further, neither party has
made the required showing or otherwise persuaded us that
equity requires an award of attorney fees. Accordingly, we
decline to exercise our equitable power and deny each party’s
request for attorney fees incurred on appeal.
CONCLUSION
¶28 We conclude that the district court did not address
Bonnie’s arguments for setting aside the default judgment and
the sheriff’s sale. Accordingly, we vacate the district court’s
rulings on these motions and remand for the district court to
fully address Bonnie’s arguments. We deny each party’s request
for attorney fees incurred on appeal.
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