McQueen v. Jordan Pines Townhomes Owners Ass'n

2013 UT App 53_________________________________________________________
THE UTAH COURT OF APPEALS
ISAAC MCQUEEN,
Plaintiff, Appellee, and Cross‐appellant,
v.
JORDAN PINES TOWNHOMES OWNERS ASSOCIATION, INC.,
Defendant, Appellant, and Cross‐appellee.
Opinion
No. 20110312‐CA
Filed February 28, 2013
Third District, Salt Lake Department
The Honorable Joseph C. Fratto Jr.
No. 070918316
John D. Morris and Jamie L. Nopper, Attorneys for Appellant
and Cross‐appellee
Bruce A. Maak, Attorney for Appellee and Cross‐appellant
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion,
in which JUDGE JAMES Z. DAVIS concurred.
JUDGE J. FREDERIC VOROS JR. concurred with opinion.
CHRISTIANSEN, Judge:
¶1 Defendant Jordan Pines Townhomes Owners Association,
Inc. appeals the district court’s grant of partial summary judgment
in favor of plaintiff, Isaac McQueen. McQueen cross‐appeals the
district court’s denial of his requested attorney fees. We affirm.
McQueen v. Jordan Pines Townhomes
BACKGROUND1
¶2 Jordan Pines Townhomes Owners Association, Inc. (the
Association) is a condominium association located in West Jordan,
Utah. Ownership of a Jordan Pines condominium unit requires
owners to sign a condominium declaration by which they agree to
pay assessments to the Association. The assessments cover exterior
and clubhouse maintenance, snow removal, common utilities, and
other expenses. If the required assessments are not paid, the
condominium declaration provides for the creation of a lien that
may be enforced through foreclosure or sale in accordance with the
law of “deeds of trust or mortgages or in any other manner
permitted by law.” In February 2006, McQueen purchased a
condominium unit at Jordan Pines Townhomes and signed the
required declaration. McQueen never actually occupied the unit
and, instead, leased it out to several different tenants over a period
of nineteen months.
¶3 At some point after he purchased the condominium unit,
McQueen came to be in arrears on his assessment fees in the
amount of $903.71.2 The Association, acting through its attorney,
initiated nonjudicial foreclosure proceedings on March 2, 2007, by
recording with the office of the Salt Lake County Recorder a Notice
of Lien against McQueen’s unit. The Association later recorded a
1. “Before we recite the facts, we note that in reviewing a grant of
summary judgment, we view the facts and all reasonable
inferences drawn therefrom in the light most favorable to the
nonmoving party. We state the facts in this case accordingly.”
Higgins v. Salt Lake Cnty., 855 P.2d 231, 233 (Utah 1993) (citations
omitted).
2. The record is unclear as to the exact timing of McQueen’s failure
to pay his assessments. The Association alleges on appeal that
McQueen paid only one assessment between August 2006 and
September 2007.
20110312‐CA 2 2013 UT App 53McQueen v. Jordan Pines Townhomes
Notice of Default, posted a published Notice of Sale by Public
Auction, and set the auction for September 11, 2007. Exchange
Properties, Inc., a company owned by J. Daniel Fox (collectively,
Exchange), was the only bidder at the auction. Exchange purchased
McQueen’s unit for $3,312.76. The purchase amount included the
assessment fees arrearage, interest, the cost of selling the unit, and
attorney fees incurred in pursuing the foreclosure against
McQueen’s unit. Once the Association delivered the deed to the
unit, Exchange evicted McQueen’s tenants.
¶4 On December 31, 2007, McQueen filed suit against Exchange
and the Association seeking to quiet title to the unit and to recover
damages for slander of title. McQueen thereafter filed a motion for
partial summary judgment, arguing as a matter of law that (1) the
nonjudicial foreclosure procedure followed by the Association was
ineffective and void, (2) McQueen remained the owner of the
subject property, and (3) title to the subject property should be
quieted in favor of McQueen. On January 4, 2009, the district court
granted McQueen’s partial summary judgment motion and
determined that the Association did not appoint a qualified trustee
to perform the nonjudicial foreclosure sale as required by section
57‐8‐20 of the Condominium Ownership Act, see generally Utah
Code Ann. § 57‐8‐20(4) (LexisNexis 2010) (current version at id.
§ 57‐8‐44, ‐45 (Supp. 2012)), and the Trust Deed Act, see generally id.
§§ 57‐1‐19 to ‐38 (2010 & Supp. 2012). Consequently, the court
invalidated the sale of the condominium unit to Exchange and
quieted title to the unit in McQueen.
¶5 McQueen next attempted to regain possession of his unit by
contacting Exchange and counsel for the Association. When his
efforts proved to be unsuccessful, McQueen filed an unlawful
detainer action against Exchange and Exchange’s tenants. The
unlawful detainer action was tried before a different district court
judge on April 6, 2009. The court took judicial notice of the prior
partial summary judgment ruling and determined that McQueen
was entitled to exclusive possession of the unit. Exchange did not
20110312‐CA 3 2013 UT App 53McQueen v. Jordan Pines Townhomes
appeal this ruling. McQueen retook possession of his condominium
in April 2009.
¶6 On May 26, 2009, McQueen filed a second amended
complaint in the quiet title case. In addition to the claims not
resolved by the court’s previous partial summary judgment ruling,
the second amended complaint alleged that Exchange had
committed waste and that McQueen was entitled to attorney fees.
Following a bench trial in March 2010, the court entered final
judgment against the Association and issued findings of fact and
conclusions of law. Relevant to this appeal, the court ruled that
McQueen was not entitled to attorney fees as a matter of law and
dismissed that claim with prejudice. The court also confirmed its
prior partial summary judgment ruling declaring the foreclosure
procedure as ineffective and void. Both parties appeal.
ISSUES AND STANDARDS OF REVIEW
¶7 On appeal, the Association argues that the district court
erred as a matter of law in determining that the nonjudicial
foreclosure proceeding conducted by the Association was
ineffective and void because the Association failed to appoint a
qualified trustee to conduct the nonjudicial foreclosure sale
pursuant to the Condominium Ownership Act, see id. § 57‐8‐20(4)
(2010); see generally id. § 57‐8‐1 to ‐41, and the Trust Deed Act, see id.
§§ 57‐1‐19 to ‐38 (2010 & Supp. 2012). “Because summary judgment
is granted as a matter of law, we review for correctness.” Harding
v. Atlas Title Ins. Agency, Inc., 2012 UT App 236, ¶ 5, 285 P.3d 1260(citation and internal quotation marks omitted). Whether a
qualified trustee must be appointed to conduct a nonjudicial
foreclosure or sale is a question of statutory interpretation. “‘The
proper interpretation and application of a statute is a question of
law which we review for correctness, affording no deference to the
district court’s legal conclusion.’” Ellison v. Stam, 2006 UT App 150,
20110312‐CA 4 2013 UT App 53McQueen v. Jordan Pines Townhomes
¶ 16, 136 P.3d 1242 (quoting Gutierrez v. Medley, 972 P.2d 913,
914–15 (Utah 1998)).3
¶8 On cross‐appeal, McQueen contends that the district court
erred in ruling that the Association is not liable for certain of
McQueen’s attorney fees based upon the condominium declaration
and Utah Code section 78B‐5‐826 or as a result of the consequential
damages he incurred in pursuing clear title to the condominium
unit. “We review the denial of an award of attorney fees as a matter
of law for correctness.” PC Crane Serv., LLC v. McQueen Masonry,
Inc., 2012 UT App 61, ¶ 23, 273 P.3d 396.
ANALYSIS
I. The Condominium Ownership Act and the Trust Deed Act
Both Require that a Qualified Trustee Be Appointed To Conduct
a Nonjudicial Foreclosure or Sale.
A. The Relevant Statutory Law
¶9 The question presented by the Association’s appeal is how
much of the Trust Deed Act, see Utah Code Ann. §§ 57‐1‐19 to ‐46
(LexisNexis 2010 & Supp. 2012), is incorporated into the
Condominium Ownership Act, see id. §§ 57‐8‐1 to ‐41, by the latter’s
3. McQueen argues that collateral estoppel and acceptance of or
acquiescence to the district court’s ruling should bar the
Association’s appeal. Because we agree that the district court
correctly ruled that Utah law requires the appointment of a
qualified trustee, it is unnecessary for us to examine either of these
arguments. See generally State v. Carter, 776 P.2d 886, 888–89 (Utah
1989) (concluding that appellate courts “need not analyze and
address in writing each and every argument, issue, or claim raised”
and should “expeditiously focus judicial resources and energy on
those [issues which are] critical or outcome‐determinative”).
20110312‐CA 5 2013 UT App 53McQueen v. Jordan Pines Townhomes
provision that a lien for nonpayment of a condominium unit
assessment may be enforced through foreclosure or sale according
to the law of deeds of trust or mortgages. See id. § 57‐8‐20 (4)(a)–(b)
(2010). The relevant portion of the Condominium Ownership Act
is Utah Code subsection 57‐8‐20(4)(a)–(b), which was the
controlling statute at the time litigation commenced in this case. See
id.4 Under this statute, nonpayment of a condominium unit
assessment resulted in a lien in favor of the management of the
condominium association. See id. That is,
if any unit owner fails or refuses to pay an
assessment when due, that amount constitutes a lien
4. The Utah Legislature repealed this section of the Condominium
Ownership Act in May 2011 and replaced it with Utah Code section
57‐8‐44 and ‐45. See Utah Laws 2011, ch. 355, § 45, eff. May 10, 2011.
During oral argument before this court, counsel for McQueen
moved to strike the portions of the Association’s reply brief which
address how the “2011 amendments [to the Condominium
Ownership Act] came to say what they say.” We agree that this
section of the Association’s reply brief inappropriately discusses
the Association’s and others’ efforts in seeking amendment to the
statute in 2011. Proper examples of legislative history include
legislative floor debates, committee reports, transcripts of
discussions at committee hearings, conference committee reports,
analyses of bills by legislative counsel and administrative
departments, amendments accepted and rejected, and prior and
subsequent legislation dealing with the same subject matter. See
Jose R. Torres & Steve Windsor, State Legislative Histories: A Select,
Annotated Bibliography, 85 Law Libr. J. 545, 546 (1993). In short,
legislative history “encompasses almost any relevant and reliable
evidence relating to events that influenced passage of the
legislation.” Id. at 547. The Association’s reply brief relies on the
anecdotal experiences of a few individuals involved in the 2011
attempts to amend the statute. Accordingly, we grant McQueen’s
motion to strike.
20110312‐CA 6 2013 UT App 53McQueen v. Jordan Pines Townhomes
on the interest of the owner in the property, and
upon the recording of notice of lien by the manager
or management committee it is a lien upon the unit
owner’s interest in the property prior to all other
liens and encumbrances . . . .
Id. § 57‐8‐20(4)(a).5
¶10 Based upon McQueen’s arrearage, there is no dispute the
Association had a rightful lien against McQueen’s condominium
unit in this case. Rather, the parties disagree about the procedure
undertaken by the Association to foreclose on that lien. The statute
also sets forth the procedure for enforcing an assessment lien:
The lien for nonpayment of an assessment may be
enforced by sale or foreclosure of the unit owner’s
interest by the manager or management committee.
The sale or foreclosure shall be conducted in the
same manner as foreclosures in deeds of trust or
mortgages or in any other manner prescribed by law.
Id. § 57‐8‐20(4)(b). As noted in the Condominium Ownership Act,
the sale or foreclosure of an assessment lien must be conducted in
the same manner as foreclosures involving trust deeds, mortgages,
or any other method permitted by law. Utilization of a trust deed
in a foreclosure allows property to be nonjudicially foreclosed,
often making a trust deed the preferred option over the traditional
mortgage foreclosure process that requires judicial involvement.
Nonjudicial trust deed foreclosures and sales are governed by the
Trust Deed Act. Accordingly, we turn to the specific requirements
of the Trust Deed Act to determine the appropriate procedure for
enforcing an assessment lien by nonjudicial foreclosure.
5. In this opinion, we use the term “assessment lien” to refer to a
lien for nonpayment of a condominium unit assessment pursuant
to section 57‐8‐20.
20110312‐CA 7 2013 UT App 53McQueen v. Jordan Pines Townhomes
¶11 Relevant to our analysis is section 57‐1‐19(3), which defines
a trust deed as a device that “convey[s] real property to a trustee in
trust to secure the performance of an obligation of the trustor or
other person named in the deed to a beneficiary.” Id. § 57‐1‐19(3)
(2010). Additionally, section 57‐1‐21 is applicable here and states
that the power of sale “may only be exercised by the trustee of a
trust deed if the trustee is qualified under Subsection (1)(a)(i) or
(iv).” Id. § 57‐1‐21(3). Notably, section 57‐1‐21(4) mandates that
[a] trust deed with an unqualified trustee or without
a trustee shall be effective to create a lien on the trust
property, but the power of sale and other trustee
powers under the trust deed may be exercised only
if the beneficiary has appointed a qualified successor
trustee under Section 57‐1‐22.
Id. § 57‐1‐21(4). The Condominium Ownership Act requires that
nonjudicial assessment lien foreclosures and sales be carried out
pursuant to the requirements set forth in the Trust Deed Act. The
Trust Deed Act, in addition to other procedural requirements like
proper notice, requires the creation of a trust relationship and the
appointment of a qualified trustee.6 The extent to which these
requirements apply to the Condominium Ownership Act is the
subject of the Association’s appeal.
6. We read the concurring opinion to require the conveyance of title
to a condominium unit to a trustee in trust as a necessary
prerequisite to the exercise of a power of sale by the manager or
management committee of a condominium association. This may
be true. Regardless, we do not address the concern raised by the
concurrence because resolution of that issue is not necessary for
our determination. Here, we are concerned only with the validity
of the Association’s foreclosure procedure, as opposed to the
requisite procedures leading up to the foreclosure.
20110312‐CA 8 2013 UT App 53McQueen v. Jordan Pines Townhomes
B. Plain Language Interpretation of the Condominium Ownership
Act and the Trust Deed Act
¶12 Following its grant of partial summary judgment at oral
argument, the district court ruled that the Association had failed to
comply with the statutory requirements for a nonjudicial
foreclosure of an assessment lien. Under the district court’s
interpretation of the Condominium Ownership Act and Trust Deed
Act, a party must appoint a qualified trustee if it wishes to enforce
an assessment lien via foreclosure or sale without judicial
intervention. Because the Association failed to appoint a qualified
trustee, the court declared as ineffective and void the foreclosure
sale of McQueen’s condominium.
¶13 The Association argues on appeal that the district court
incorrectly interpreted subsections 57‐8‐20(a) and (b) and ignored
the superiority of the Condominium Ownership Act over the Trust
Deed Act where the two statutory provisions conflict.7 The
Association attacks the district court’s reliance on the language in
section 57‐8‐20(4)(b) that requires assessment lien foreclosures to
be conducted in the “same manner” as those for trust deeds. See id.§ 57‐8‐20(4)(b). This phrase, according to the Association, refers
only to sections 57‐1‐23 through 57‐1‐29 of the Trust Deed Act,
which address the procedures applicable to a permitted sale, such
as those relating to timing and notice. See id. §§ 57‐1‐23 to ‐29 (2010
& Supp. 2012). The Association insists that the phrase, “same
manner,” does not refer to earlier sections of the statute that outline
7. The Association cites the following portion of the Utah Code in
support of its argument that the Condominium Ownership Act
supersedes the requirements contained in the Trust Deed Act: “The
provisions of this chapter shall be in addition and supplemental to
all other provisions of law, statutory or judicially declared, provided
that wherever the application of the provisions of this chapter conflict with
the application of such other provisions, this chapter shall prevail.” Utah
Code Ann. § 57‐8‐35(1) (LexisNexis 2010) (emphasis added).
20110312‐CA 9 2013 UT App 53McQueen v. Jordan Pines Townhomes
a conveyance in trust with the power of sale and the appointment
of a qualified trustee because the purpose behind the creation of a
trust is to provide a security interest for the lender. See id. § 57‐1‐20
(2010) (“Transfers in trust of real property may be made to secure
the performance of an obligation of the trustor or any other person
named in the trust deed to a beneficiary.”). The Association argues
that because the security interest in assessment liens arises
automatically under section 57‐8‐20(4)(a), there is no need to create
a trust relationship and appoint a qualified trustee to pursue
nonjudicial foreclosure of a condominium unit. To hold otherwise,
according to the Association, would create a conflict between the
two statutes, in which case the specific provisions of the
Condominium Ownership Act prevail. See id. § 57‐8‐35(1).
¶14 In support of its position, the Association relies on the
language in section 57‐8‐20(4)(b), which states that a foreclosure
upon or a sale of a condominium unit need only be enforced by the
“manager or management committee.” Utah Code Ann.
§ 57‐8‐20(4)(b) (LexisNexis 2010) (current version at id. § 57‐8‐44, ‐
45 (Supp. 2012)). According to the Association, imposing a trustee
requirement in a condominium foreclosure proceeding conflicts
with the Condominium Ownership Act requirements, which
require only that the sale be conducted by the “manager or
management committee.” Id. Because the Condominium
Ownership Act prevails over the Trust Deed Act, the Association
asserts that no trustee is required to conduct a foreclosure.
¶15 Interpreting the interplay between the Condominium
Ownership Act and the Trust Deed Act is an issue of first
impression in Utah courts.8 “When interpreting a statute, we look
8. McQueen cites General Glass Corp. v. Mast Construction Co., 766
P.2d 429 (Utah Ct. App. 1988), for the proposition that failure to
convey title to a trustee prevents a valid nonjudicial foreclosure
proceeding or sale. See id. at 432 (determining that a document
purporting to be a trust deed was ineffective because it failed to
(continued...)
20110312‐CA 10 2013 UT App 53McQueen v. Jordan Pines Townhomes
first to its text. We employ plain language analysis to carry out the
legislative purpose of the statute as expressed through the enacted
text.” Richards v. Brown, 2012 UT 14, ¶ 23, 274 P.3d 911 (footnote
citations omitted). Based on this basic rule of statutory
construction, we agree with the district court’s application of the
Trust Deed Act to a nonjudicial foreclosure of an assessment lien
and its determination that the appointment of a qualified trustee
with the power of sale is necessary to conduct a nonjudicial
foreclosure or sale of an assessment lien.
¶16 Subsection 57‐8‐20(4)(b) of the Condominium Ownership
Act states that an assessment lien “may be enforced by sale or
foreclosure of the unit owner’s interest by the manager or
management committee.” Utah Code Ann. § 57‐8‐20(4)(b). In
addition, “[t]he sale or foreclosure shall be conducted in the same
manner as foreclosures in deeds of trust or mortgages or in any
other manner prescribed by law.” Id. We draw two conclusions
from our reading of these provisions. First, a manager or
management committee may enforce an assessment lien. Second,
the manager or management committee’s enforcement of an
assessment lien–‐through foreclosure or sale—must be carried out
in a manner consistent with the requirements of the Trust Deed
Act, should the manager or management committee elect that
option.9 The statute provides no further guidance, and courts
8. (...continued)
identify or name a trustee). McQueen also cites cases from other
states to support his argument that use of an unqualified trustee in
a foreclosure proceeding voids a trustee’s sale. See Dimock v.
Emerald Properties. LLC, 97 Cal. Rptr. 2d 255, 261 (Cal. Ct. App.
2000); White v. Simpson, 915 P.2d 1004, 1008–09 (Or. Ct. App. 1996).
Because we reach our resolution by applying rules of statutory
construction, we need not look to the law in other states.
9. A foreclosure or sale may also be carried out consistent with the
law of mortgages which involves judicial proceedings. See generally
(continued...)
20110312‐CA 11 2013 UT App 53McQueen v. Jordan Pines Townhomes
“should avoid adding to or deleting from statutory language,
unless absolutely necessary to make it a rational statute.” Lorenzo
v. Workforce Appeals Bd., 2002 UT App 371, ¶ 11, 58 P.3d 873(citation and internal quotation marks omitted). Nor does the
statute parse out which specific sections of the Trust Deed Act
apply. The statute simply states that an assessment lien foreclosure
or sale must be conducted “in the same manner as foreclosures in
deeds of trust or mortgages or in any other manner prescribed by
law.” Id.
¶17 Our analysis of the plain language of the Condominium
Ownership Act and Trust Deed Act leads us to conclude that more
than just the Trust Deed Act provisions relating to timing and
notice, as argued by the Association, should apply to a nonjudicial
foreclosure of an assessment lien. In construing the two statutes
together, we determine that the Condominium Ownership Act
forms a foundational base for the foreclosure of an assessment lien
on a condominium unit, which base is supplemented by the Trust
Deed Act. In other words, just because elements of the Trust Deed
Act are incorporated by reference in the Condominium Ownership
Act does not mean that the two statutes conflict. As a result, the
manager or management committee that pursues foreclosure
without involving the court must appoint a qualified trustee to
conduct the sale or foreclosure of a condominium owner’s interest
in the unit. This interpretation harmonizes the Condominium
Ownership Act with the Trust Deed Act and avoids the conflicts
envisioned by the Association. Therefore, we determine the district
court correctly ruled that “[n]owhere in the Condominium Act is
the need for a trustee in a non‐judicial sale eliminated.”
9. (...continued)
Utah Code Ann. §§ 78B‐6‐901 to ‐909 (LexisNexis 2012). Because
the case before us involves a nonjudicial foreclosure sale, we
determine only whether the Trust Deed Act is applicable. See id.
§ 57‐8‐20(4)(b) (2010).
20110312‐CA 12 2013 UT App 53McQueen v. Jordan Pines Townhomes
¶18 The Association argues that appointment of a trustee under
the Condominium Ownership Act is unnecessary. According to the
Association, the provisions of the Trust Deed Act that discuss a
trustee’s duties could just as easily be applied to the party
conducting the foreclosure or sale, even though that party is not an
appointed trustee. Though that approach may functionally be true,
it is nonetheless legally inconsistent with our interpretation
discussed above. Additionally, the Association argues that because
the trustee requirement does not explicitly exist in the
Condominium Ownership Act, such a requirement is not only
inapplicable, it is not permitted. Thus, it appears that the
Association asserts that in order to require the appointment of a
trustee, the Condominium Ownership Act must expressly instruct
a party to do so. Yet, this interpretation ignores the plain language
construction of both statutes. Because the Trust Deed Act requires
appointment of a qualified trustee, we find this same requirement
applicable to the nonjudicial foreclosure or sale of a condominium
unit. See id. §§ 57‐1‐19(3), ‐21(3),(4).
C. The Absence of a Trustee in the Present Case
¶19 Next, the Association argues that its attorney was legally
authorized to act on its behalf and conduct the foreclosure sale of
McQueen’s condominium. The Association argues that it was
appropriate and proper for its attorney to prepare all paperwork
necessary for the sale, to conduct the sale, and to execute all
documents necessary for the sale of the condominium. We
disagree. The record reveals that, though its attorney may have
qualified as a trustee under the Trust Deed Act, the Association
failed to appoint its attorney as such.
¶20 The Association’s argument again ignores the plain
language of subsection 57‐8‐20(4)(b) of the Condominium
Ownership Act, which vests the power of sale only in a “manager
or management committee.” Utah Code Ann. § 57‐8‐20(4)(b) (2010).
While it may be true that principles of agency allow a management
committee to delegate the power of sale to its attorney, the attorney
20110312‐CA 13 2013 UT App 53McQueen v. Jordan Pines Townhomes
must still be a properly appointed and qualified trustee. Based
upon the interplay between the Condominium Ownership Act and
the Trust Deed Act, we determine that the plain language of
subsection 57‐8‐20(4)(b) does not extend the power of sale to the
Association’s attorney without appointment as a qualified trustee.
Nor did the Association attempt to appoint a trustee once the
foreclosure process began. The Association simply delegated all
responsibility for the matter to its attorney, who was never
officially appointed as trustee.10 Section 57‐1‐21(4) of the Trust
Deed Act clearly indicates that if no trustee has been appointed, as
is the case here, then “the power of sale and other trustee powers
under the trust deed may be exercised only if the beneficiary has
appointed a qualified successor trustee.” Id. § 57‐1‐21(4). No
qualified successor trustee was appointed in this instance.
¶21 The purpose of requiring the appointment of a qualified
trustee is to provide an independent third party who can
objectively execute a foreclosure or sale in the absence of judicial
oversight. See generally Russell v. Lundberg, 2005 UT App 315, ¶ 22,
120 P.3d 541 (“[A] trustee has a duty to act with reasonable
diligence and good faith on [the trustor’s] behalf consistent with
[the trustee’s] primary obligation to assure payment of the secured
debt.” (alterations in original) (citation and internal quotation
marks omitted)). Indeed, while a trustee’s obligations in a trust
deed relationship do not normally rise to the level of fiduciary
duty, a trustee is not without any duty whatsoever. See id. (“While
a trustee’s primary duty and obligation is to the beneficiary of the
trust, the trustee’s duty to the beneficiary does not imply that the
trustee may ignore the trustor’s rights and interests.” (citations and
10. Attorneys may properly serve as trustees if they are qualified
and appointed. See Utah Code Ann. § 57‐1‐21(1)(a)(i) (“The trustee
of a trust deed shall be: (i) any active member of the Utah State Bar
who maintains a place within the state where the trustor or other
interested parties may meet with the trustee . . . .”). Though it
appears that the Association’s attorney was qualified, the
Association’s attorney was never appointed as trustee.
20110312‐CA 14 2013 UT App 53McQueen v. Jordan Pines Townhomes
internal quotation marks omitted)); Blodgett v. Martsch, 590 P.2d
298, 302 (Utah 1978) (“The duty of the trustee under a trust deed is
greater than the mere obligation to sell the pledged property in
accordance with the default provision of the trust deed instrument,
it is a duty to treat the trustor fairly and in accordance with a high
punctilio of honor.”). This underlying rationale behind the trustee
requirement thus strengthens our conclusion that a party must
appoint a qualified trustee in order to enforce an assessment lien
without judicial intervention. Because the Association failed to
properly appoint a qualified trustee, we affirm the district court’s
determination that the sale of McQueen’s condominium unit to
Exchange was invalid.
II. McQueen Is Not Entitled to Attorney Fees Because His Claim
Did Not Arise Under the Condominium Declaration, Under an
Applicable Statute, or as Consequential Damages.
¶22 After the bench trial in March 2010, the district court issued
a memorandum decision, ruling that McQueen was entitled to
“reasonable attorney fees for efforts to recover title and possession
of the property.” The Association then submitted a motion to
amend or modify that decision, which the court granted. The
district court issued its final ruling on the matter on March 17, 2011,
stating, “As a matter of law, McQueen is not entitled to recover his
attorney[] fees from the Association or Fox/Exchange based upon
the provisions of the condominium declaration, the judicial
equitable exception rule, as a component of consequential
damages, or otherwise.” The district court also dismissed
McQueen’s attorney fees claim with prejudice. On appeal,
McQueen argues that the district court erred in denying his request
for attorney fees.
A. The Condominium Declaration and Utah Code Section 78B‐5‐
826
¶23 McQueen first argues that the court should have awarded
his attorney fees based upon an application of Utah’s Reciprocal
20110312‐CA 15 2013 UT App 53McQueen v. Jordan Pines Townhomes
Fee Statute to the condominium declaration at issue in this case. See
Utah Code Ann. § 78B‐5‐826 (LexisNexis 2012). The pertinent
statute states,
A court may award costs and attorney fees to either
party that prevails in a civil action based upon any
promissory note, written contract, or other writing
executed after April 28, 1986, when the provisions of
the promissory note, written contract, or other
writing allow at least one party to recover attorney
fees.
Id. “The plain language of the Reciprocal Fee Statute indicates that
‘a court may award costs and attorney fees to a prevailing party in
a civil action if two main conditions are met.’” Anderson &
Karrenberg v. Warnick, 2012 UT App 275, ¶ 10, 289 P.3d 600 (quoting
Bilanzich v. Lonetti, 2007 UT 26, ¶ 14, 160 P.3d 1041). “The first
condition is that ‘the civil action must be based upon any . . .
written contract,’ and the second is that the contract ‘must allow at
least one party to recover attorney’s fees.’” Id. (quoting Bilanzich,
2007 UT 26, ¶ 14 (citation and internal quotation marks omitted)).
¶24 We determine that McQueen does not satisfy the first
condition of the statute. McQueen argues that he sought to enforce
the terms of the condominium declaration by suing the Association
for breach of its provisions. See Hooban v. Unicity Int’l, Inc., 2012 UT
40, ¶ 22, 285 P.3d 766 (“[A]n action is ‘based upon’ a contract under
the statute if a ‘party to the litigation assert[s] the writing’s
enforceability as basis for recovery.’” (second alteration in original)
(quoting Bilanzich 2007 UT 26, ¶ 15)). McQueen points to his second
amended complaint as support for his claim that the Association
breached the condominium declaration.11 However, none of the
11. Specifically, McQueen argues that his second amended
complaint alleged that the Association’s notice of lien, which
initiated the foreclosure proceedings, was flawed; that the
(continued...)
20110312‐CA 16 2013 UT App 53McQueen v. Jordan Pines Townhomes
five counts listed in McQueen’s second amended complaint
expressly or substantively alleged a breach of the condominium
declaration. To the contrary, McQueen sued the Association on just
two grounds—seeking to quiet title to the property and alleging
slander of title. He prevailed only on the quiet title action. The
remaining counts—slander of title (again), unjust enrichment,
waste, and trespass—were levied against Exchange.
¶25 McQueen’s quiet title action is distinct from a suit based
upon breach of the condominium declaration, even though the two
may be related. The principal purpose behind the quiet title action
was to establish rightful ownership of the condominium unit, not
to enforce the condominium declaration. See Andrus v. Bagley, 775
P.2d 934, 935 (Utah 1989) (“The purpose of a quiet title action is to
perfect an interest in property that exists at the time suit is filed.”).
Though it is true that a part of the quiet title litigation below
involved analysis of the condominium declaration, resolution of
the case ultimately turned upon the district court’s interpretation
of the Condominium Ownership Act and Trust Deed Act.
Moreover, the parts of the condominium declaration providing for
attorney fees refer to the Association’s available remedies upon
nonpayment of assessments. If McQueen had sued the Association
based on whether he actually paid his assessments, then perhaps
this case could be construed as one arising under the condominium
declaration. Yet McQueen sought clear title to the condominium,
a cause of action which we determine to be independent and
distinct from a cause of action seeking to enforce the condominium
declaration; therefore, McQueen’s suit cannot be characterized as
one based upon a written contract. Furthermore, section 78B‐5‐826
“does not create an independent right to a fee award that the
contract’s attorney fee provision would not allow to either party
simply because the fee provision is one‐sided.” PC Crane Serv., LLC
11. (...continued)
foreclosure was improperly conducted by a party not authorized
by the declaration; and that the foreclosure was not conducted in
compliance with the declaration’s requirements.
20110312‐CA 17 2013 UT App 53McQueen v. Jordan Pines Townhomes
v. McQueen Masonry, Inc., 2012 UT App 61, ¶ 23, 273 P.3d 396.
Therefore, section 78B‐5‐826 is inapplicable and McQueen is not
entitled to attorney fees under this ground.
B. Attorney Fees as Consequential Damages
¶26 McQueen also claims he is entitled to his attorney fees as a
result of the consequential damages he incurred. Recovery of
attorney fees as consequential damages is a narrow exception to the
normal rule requiring statutory or contractual authorization of an
attorney fee award. See Collier v. Heinz, 827 P.2d 982, 983 (Utah Ct.
App. 1992). Recovery of attorney fees as consequential damages
generally applies in just two situations. The first is when the
litigation is based on an insurance contract. See Pugh v. North Am.
Warranty Servs., Inc., 2000 UT App 121, ¶ 14, 1 P.3d 570 (“Our
courts have carved out a narrow exception to [the] rule [requiring
statutory or contractual authorization for attorney fees] in the
insurance context.”). This case is clearly not based on an insurance
contract. Second, “[a] well‐established exception to this general rule
allows recovery of attorney fees as consequential damages, but
only in the limited situation where the defendant’s breach of
contract foreseeably caused the plaintiff to incur attorney fees
through litigation with a third party.” Collier, 827 P.2d at 984; see
also Lewiston State Bank v. Greenline Equip., LLC, 2006 UT App 446,
¶ 22, 147 P.3d 951. This exception refers to the third‐party tort rule
and does not apply in this case. McQueen would have had to assert
and establish that the Association breached the condominium
declaration and that the breach foreseeably caused him to incur
attorney fees in litigation with a third party. Those facts do not
exist here. Rather, the dispute is solely between the Association and
McQueen and “under the third‐party exception, attorney fees
incurred in litigation between the contracting parties are not
recoverable by the non‐breaching party as damages.” Collier, 827
P.2d at 984.
¶27 Moreover, this exception requires that damages result from
a breach of a contract. See id. McQueen sued the Association seeking
20110312‐CA 18 2013 UT App 53McQueen v. Jordan Pines Townhomes
to quiet title to the property and alleging slander of title, not for
breach of the condominium declaration. McQueen’s request for
attorney fees is understandable after he was forced to bring suit
against the Association to quiet title to his condominium. However,
“attorney fees are recoverable under this exception only if they are
caused by and are a foreseeable result of the original breach of
contract, not a subsequent wrongful act.” Gardiner v. York, 2006 UT
App 496, ¶ 9, 153 P.3d 791. The Association’s ineffective foreclosure
was not a breach of the declaration, even though it may have been
a procedurally wrongful act. Therefore, because this exception
requires the award of damages arising from a breach of contract, it
is inapplicable to this case. Accordingly, we conclude that
McQueen is not entitled to attorney fees as a result of consequential
damages.
CONCLUSION
¶28 The district court correctly construed the Condominium
Ownership Act in conjunction with the Trust Deed Act to require
the appointment of a qualified trustee with the power of sale.
Because the Association failed to comply with this requirement, we
affirm the district court’s summary judgment ruling that the
nonjudicial foreclosure sale was ineffective and void. We also
affirm the district court’s ruling that McQueen was not entitled to
attorney fees under the reciprocal attorney fee statute or as a result
of consequential damages because his quiet title claim did not arise
under the condominium declaration.
VOROS, Judge (concurring):
¶29 I concur in the result reached by the majority opinion, and
agree with its analysis except as to one point. The fatal flaw in the
Association’s nonjudicial foreclosure was not the absence of a
trustee, but the absence of a trust deed. I do not agree that under
the controlling version of the statute the manager or management
20110312‐CA 19 2013 UT App 53McQueen v. Jordan Pines Townhomes
committee of a condominium homeowners association may, when
no conveyance in trust has occurred, appoint a qualified trustee. Nor
do I agree that such a “trustee” may, upon a unit owner’s non‐
payment of assessments, notice and conduct a public sale and,
presumably, convey to the highest bidder fee simple title to the
condominium.
¶30 In this context, a trustee is “a person to whom title to real
property is conveyed by trust deed, or his successor in interest.”
Utah Code Ann. § 57‐1‐19(4) (LexisNexis 2010). A trust deed is a
deed, executed in conformity with title 57, “conveying real
property to a trustee in trust to secure the performance of an
obligation of the trustor or other person named in the deed to a
beneficiary.” Id. § 57‐1‐19(3). Thus, “a trust deed is a conveyance by
which title to the trust property passes to the trustee.” First Sec.
Bank of Utah, NA v. Banberry Crossing, 780 P.2d 1253, 1256 (Utah
1989). Unlike the majority, I cannot see how a party (such as the
management committee of the Association) that does not hold title
to a condominium can convey title to a “trustee.” Nor can I see how
a “trustee” who does not hold title could, in turn, convey title to the
purchaser at a public sale.
¶31 The Condominium Ownership Act does of course
incorporate by reference some portion of the Trust Deed Act. The
relevant provision states that a “lien for nonpayment of an
assessment may be enforced by sale or foreclosure of the unit
owner’s interest by the manager or management committee . . . in
the same manner as foreclosures in deeds of trust or mortgages or
in any other manner permitted by law.” Utah Code Ann. § 57‐8‐
20(4)(b) (2010). However, I do not read this generalized language
to eliminate what I view as a necessary prerequisite to the exercise
of a power of sale: the conveyance of the property in trust to secure
the performance of an obligation.
¶32 As noted in the majority opinion, the Legislature has since
amended the Condominium Ownership Act to effect just such a
conveyance by operation of law when a buyer purchases a
20110312‐CA 20 2013 UT App 53McQueen v. Jordan Pines Townhomes
condominium. See id. § 57‐8‐45(2) (Supp. 2012). “[W]e presume that
when the legislature amends a statute, it intended the amendment
to change existing legal rights.” Harvey v. Cedar Hills City, 2010 UT
12, ¶ 13, 227 P.3d 256 (citations and internal quotation marks
omitted). A statutory amendment may nevertheless be given
retroactive effect if it merely clarifies the meaning of the existing
statute or if any change is merely procedural. Id. ¶ 14. But here, the
Association acknowledges that these amendments “are prospective
only.” Accordingly, they reinforce rather than undermine my
reading of the Condominium Ownership Act.
20110312‐CA 21 2013 UT App 53