MAA Prospector v. Palmer

This opinion is subject to revision before final
publication in the Pacific Reporter
2017 UT 68IN THE
SUPREME COURT OF THE STATE OF UTAH
MAA PROSPECTOR MOTOR LODGE, LLC,
Appellee,
v.
RAY W. PALMER, et al.,
Appellants.
No. 20151010
Filed September 28, 2017
On Direct Appeal
Seventh District, San Juan
The Honorable Lyle R. Anderson
No. 140700016
Attorneys:
Ronald G. Russell, Royce B. Covington, Jeffery A. Balls, Salt Lake City,
for appellee
Craig C. Halls, Blanding, for appellant
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in
which CHIEF JUSTICE DURRANT, JUSTICE HIMONAS, JUSTICE PEARCE, and
JUDGE HOLMBERG joined.
Having recused herself, JUSTICE DURHAM does not participate herein;
DISTRICT COURT JUDGE KENT R. HOLMBERG sat.
MAA PROSPECTOR MOTOR LODGE v. PALMER
Opinion of the Court
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶ 1 This case involves the same unstayed court order at issue in
2DP Blanding, LLC v. Palmer, 2017 UT 62, __ P.3d __. The order
authorized a foreclosure sale of real property. The sale was executed
while the litigation was on appeal. In this case, MAA Prospector
purchased property (Parcel 1) at the foreclosure sale. Unlike 2DP
Blanding, MAA Prospector had actual notice of Palmer’s appeal of the
foreclosure order when it purchased the property. We are asked
whether such notice means that MAA Prospector took the property
subject to the outcome of the appeal. We answer this question in the
negative. We reaffirm our statement in 2DP Blanding that “an appellant
who takes no action to preserve his interests in property at issue on
appeal has no recourse against a lawful third-party purchaser.” 2DP
Blanding, 2017 UT 62, ¶ 1. And we accordingly affirm the district court’s
award of summary judgment to MAA Prospector.
¶ 2 We also affirm the award of attorney fees to MAA Prospector.
Palmer raises credible statutory arguments for reversal but ignores
adverse controlling authority. And we decline to overrule our
precedent where Palmer has failed to contend that it was wrongly
decided or subject to being overruled.
I
¶ 3 This case is an offshoot of a lien dispute between Ray Palmer
and First National Bank. In July 2003, Palmer agreed to sell two parcels
of commercial real estate to JDJ Holdings, Inc. JDJ obtained two loans to
finance the purchase—one from First National and one from Palmer.
Both loans were secured by trust deeds. First National recorded its
deed on December 5, 2013 and had first position. Palmer recorded his
deed on December 12, 2013 and had second position.
¶ 4 Due to a flaw in the initial loan approval, First National was
required to record a new deed after Palmer recorded his deed. Before
recording the new deed, First National got an erroneous title report that
failed to show the Palmer deed. And despite having knowledge of
Palmer’s loan at its inception, First National relied on the erroneous
title report and simply revoked its original deed and recorded the new
deed on March 8, 2004. The bank did not obtain a subordination
agreement from Palmer. The new deed accordingly appeared to elevate
Palmer’s deed to first position. But no one discovered this repositioning
at the time.
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Cite as: 2017 UT 68Opinion of the Court
¶ 5 Five years later, JDJ defaulted on both loans. Palmer and First
National both claimed that their deed was entitled to senior position.
The deed holders initiated legal proceedings to settle the dispute, and
the district court granted summary judgment to First National. The
court held that the bank was entitled to equitable reinstatement of its
original deed. It also authorized First National to “exercise all rights
and remedies provided by its Trust Deed with respect to the Property,”
including proceeding with a foreclosure sale.
¶ 6 Palmer appealed the court’s decision on April 8, 2011. He
challenged the lien priority established by the district court’s order. But
he did not formally seek or obtain a stay of the order. And he did not
file a lis pendens on the property at any point during the litigation. On
June 29, 2011, First National issued a Notice of Trustee’s Sale under its
reinstated trust deed, and a trustee’s sale was held on August 8, 2011.
¶ 7 To this extent this case is procedurally identical to the 2DP
Blanding case. See 2DP Blanding, LLC v. Palmer, 2017 UT 62, ¶¶ 2–6, __
P.3d __. Yet there are two elements of this case that set it apart from
2DP Blanding. First, the trust deed between Palmer and the original
purchaser of Parcel 1, JDJ, authorized Palmer to seek attorney fees from
JDJ if it defaulted on the loan and foreclosure proceedings were
necessary.1 Second, MAA Prospector purchased Parcel 1 directly at the
foreclosure sale held on August 8, 2011. And it did so with actual
knowledge of Palmer’s appeal of the order approving that sale.
¶ 8 In February 2013, the court of appeals reversed the judgment
under which the foreclosure sale was conducted. It remanded the case
to the district court for further proceedings. Then, in July 2014, after
unsuccessfully litigating a claim to obtain the proceeds of the
foreclosure sale, Palmer recorded a notice of default and election to sell
under his original trust deed. MAA Prospector responded by initiating
this suit against Palmer, seeking an order enjoining Palmer from
foreclosing on the property and quieting its title to Parcel 1.
¶ 9 The district court heard cross-motions for summary judgment.
It ruled that the foreclosure sale extinguished any interest Palmer had
1 2DP Blanding was premised on the same trust deed, but the
plaintiff in that case withdrew its motion for attorney fees. Accordingly,
this provision was not at issue in that case.
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MAA PROSPECTOR MOTOR LODGE v. PALMER
Opinion of the Court
in the property. And it granted MAA Prospector’s motion to enjoin the
foreclosure sale and quiet title to Parcel 1.
¶ 10 In its ruling on summary judgment, the district court
recognized that the issue of attorney fees remained. MAA Prospector
filed a motion for fees after the summary judgment ruling but before
the entry of final judgment. After further briefing and oral argument,
the district court granted the motion for fees.
¶ 11 Palmer filed a timely appeal from both the adverse summary
judgment ruling and the attorney fees award. On appeal we review the
district court’s grant of summary judgment and its interpretation of the
attorney fee statute for correctness. See Heslop v. Bear River Mut. Ins. Co.,
2017 UT 5, ¶ 15, 390 P.3d 314; Insight Assets, Inc. v. Farias, 2013 UT 47,
¶ 8, 321 P.3d 1021.
II
¶ 12 Palmer asserts that this case is distinguishable from 2DP
Blanding because MAA Prospector had actual notice of the pending
appeal and therefore took subject to the outcome of that litigation. We
disagree.
¶ 13 “[W]hen an appellant neither obtains a stay of execution nor
timely records a lis pendens, he has no recourse against third parties
who lawfully acquire the property.” 2DP Blanding, 2017 UT 62, ¶ 27.
Actual notice does not change this rule. See id. ¶ 28. To hold otherwise
would trivialize the importance of obtaining a stay or timely filing a lis
pendens at the outset of litigation. We decline to do so. And we reject
Palmer’s other arguments for reversal on the same grounds as
articulated in 2DP Blanding. Id. ¶¶ 29–36. We thus affirm the grant of
summary judgment to MAA Prospector.
¶ 14 On the issue of attorney fees, Palmer challenges the district
court’s interpretation of the reciprocal attorney fee statute. The statute
provides that “[a] court may award costs and attorney fees to either
party that prevails in a civil action based upon any . . . written contract
. . . when the . . . written contract . . . allow[s] at least one party to
recover attorney fees.” UTAH CODE § 78B-5-826. In this case, the contract
at issue is the original loan agreement between Palmer and JDJ. The
loan agreement authorizes Palmer to collect reasonable attorney fees
associated with the costs of foreclosing the loan in the event JDJ
defaults. Palmer asserts that he has not sought attorney fees from MAA
Prospector. He likewise argues that under no theory would he be
entitled to fees against MAA Prospector. And Palmer emphasizes that
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his contract was with JDJ, not MAA Prospector. So, he claims, there is
no requisite privity to enforce the fees provision against MAA
Prospector.
¶ 15 Palmer further asserts that his reading of the statute is
consistent with our decision in Hooban v. Unicity International, Inc., 2012
UT 40, 285 P.3d 766. He argues that Hooban stands for the proposition
that only parties to the contract—or third parties who would have been
deemed parties to the contract had they prevailed in the litigation—are
entitled to an award of fees arising from the contract. See id. ¶¶ 25–29.
¶ 16 This argument seems credible on its face, both as a matter of
statutory interpretation and under Hooban. But we nonetheless reject
the argument on the grounds that Palmer has failed to address
contradictory precedent that is indistinguishable from this case. See
Insight Assets, Inc. v. Farias, 2013 UT 47, 321 P.3d 1021.
¶ 17 The question presented in Insight Assets is identical to that at
issue here. The property purchaser in that case, as here, obtained both a
bank loan and seller financing to finance the property. Id. ¶ 3. The
purchaser subsequently defaulted on both loans. Id. ¶ 4. And again as
in the present case, the bank foreclosed and the property was sold to a
third party purchaser at a foreclosure sale. Id. The attorney fees issue
thus arose when the assignee of the original seller attempted to
foreclose on the seller’s trust deed. Id. ¶ 5. The attorney fees provision
in the seller’s trust deed, moreover, was nearly identical to the
provision in the Palmer-JDJ trust deed. Under that provision, we held
that “the statutory trigger for fee shifting [was] met: the contract
allow[ed] at least one party, Insight Assets, to recover attorney fees, and
consequently the court may award attorney fees to the party that
prevails in the action.” Id. ¶ 25.
¶ 18 MAA Prospector raised and litigated Insight Assets before the
district court. And the court’s analysis of the attorney fee issue parallels
the analysis in Insight Assets. Yet Palmer failed to cite Insight Assets in
his opening brief; so of course he also failed to attempt to distinguish it
or to ask us to overrule it. When MAA Prospector raised the case in its
brief, moreover, Palmer again failed to address it on reply.
¶ 19 We therefore decline to revisit our holding in Insight Assets.
We find that case controlling. And we conclude that MAA Prospector is
entitled to fees under the analysis of that opinion.
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MAA PROSPECTOR MOTOR LODGE v. PALMER
Opinion of the Court
¶ 20 Palmer urges reversal of the attorney fee award on one other
ground. He claims that MAA Prospector’s motion for fees was
untimely filed under our rule in Meadowbrook, LLC v. Flower, 959 P.2d
115 (Utah 1998). In Palmer’s view, Meadowbrook requires that a motion
for attorney fees be filed before summary judgment is granted on the
relevant issues. And Palmer further asserts that attorney fees may not
be orally reserved. We disagree.
¶ 21 The standard in Meadowbrook requires only that a motion for
attorney fees be filed before the entry of final judgment, unless the
district court orders otherwise. Id. at 119–20. Here, the district court
expressly identified the attorney fees issue as outstanding in its order
granting summary judgment. And MAA Prospector filed its motion
before the entry of final judgment.
¶ 22 We therefore conclude that the motion was timely filed and
properly decided in light of our precedent. And we affirm the district
court’s award of attorney fees.
III
¶ 23 We affirm the district court’s grant of summary judgment and
its award of attorney fees to MAA Prospector.
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