Citimortgage, Inc. v. Stephenson

2015 UT App 205THE UTAH COURT OF APPEALS
CITIMORTGAGE, INC.,
Plaintiff and Appellee,
v.
TERRY STEPHENSON AND NORMA TIPTON,
Defendants and Appellants.
Opinion
No. 20110771-CA
Filed August 13, 2015
Fourth District Court, Provo Department
The Honorable David N. Mortensen
No. 100403817
Andrew M. Wadsworth, Attorney for Appellant
Terry Stephenson
Ronald G. Russell and Rodger M. Burge, Attorneys
for Appellant Norma Tipton
Bryce D. Panzer, Attorney for Appellee
JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
JUDGES STEPHEN L. ROTH and MICHELE M. CHRISTIANSEN
concurred.
VOROS, Judge:
¶1 This case involves the proper interpretation of an order of
the district court: did the court merely set aside a prior judgment
and return the parties to the status quo ante, or did it also
adjudicate their respective rights? In denying a post-judgment
motion, the district court maintained that it intended to resolve
the merits of the dispute. We agree and affirm.
CitiMortgage v. Stephenson
BACKGROUND
¶2 In 1997, Eugene and Mavis Stephenson created the
Stephenson Family Trust (the Trust) and named Eugene as the
trustee. 1 They transferred to Eugene, as trustee, certain real
property (the Property).
¶3 In 2005, a doctor opined that Eugene and Mavis were “so
confused or detached from reality that they are not capable of
properly taking the medications prescribed for them.” On
November 28, 2006, another doctor provided Eugene and Mavis’s
grandson, John Stephenson, a “Professional Opinion Letter”
stating that Eugene suffered from dementia, was “unable to give
informed consent for” his medical care, and “would benefit by
having a legal guardian.” On December 6, 2006, John filed a
petition in probate court that sought his appointment as legal
guardian of Eugene and Mavis; this petition was granted on
January 5, 2007. Mavis died the following month.
¶4 However, in the eight-day window between John’s
receiving the doctor’s opinion letter and filing the guardianship
petition, Eugene executed a warranty deed (the Warranty Deed)
transferring the Property from Eugene, as trustee, to John. After
the petition was granted, John refinanced the mortgage on the
Property. The new loan was secured by a trust deed against
the Property (the Trust Deed) in favor of First Colony Mortgage
Company. The Trust Deed was assigned to CitiMortgage Inc. in
2010 and forms the basis for CitiMortgage’s claimed interest.
¶5 In 2009 the probate court named Eugene and Mavis’s son,
Terry Stephenson, as successor trustee of the Trust. Terry filed a
motion seeking to revoke the appointment of John as guardian
1. Because several individuals involved in this case share the
same last name, we generally refer to them by their first names.
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and to invalidate the Warranty Deed that transferred the
Property from Eugene, as trustee, to John. The next day, Terry
recorded a Notice of Lis Pendens on the Property but did not
otherwise notify CitiMortgage. The same day, Eugene died,
rendering the guardianship issue moot.
¶6 On December 17, 2009, the probate court ruled that the
Warranty Deed was void ab initio because Eugene had not been
competent to sign it. Six months later, the probate court issued
an order invalidating the Trust Deed pursuant to a motion by
Terry. The probate court reasoned that because the Warranty
Deed conveying the Property to John was void ab initio, the
Trust Deed executed by John was also void. The probate court
deeded the Property to Terry, as trustee of the Trust, by judicial
deed.
¶7 Terry executed a trust deed against the Property in favor
of Norma Tipton, as trustee of the Tipton Family Trust. We refer
collectively to Terry, the trustee of the Trust, and Norma Tipton,
the trustee of the Tipton Family Trust, as Defendants.
¶8 CitiMortgage then filed this suit in the district court,
arguing that its predecessor-in-interest was a necessary party to
the probate proceedings. CitiMortgage sought a declaration that
the Trust Deed constituted a valid encumbrance on the Property,
prior and superior to the interests of Defendants. Defendants
responded that CitiMortgage’s predecessor-in-interest was not a
necessary party, because the core issue in the probate proceeding
was whether the Warranty Deed’s transfer from Eugene to John
was invalid due to Eugene’s incompetence.
¶9 The district court granted summary judgment in favor of
CitiMortgage. It ruled that “[b]ecause [CitiMortgage] was not a
party to the probate proceeding[,] it is not bound by any orders
of the [probate] court issued in that case. In short,
[CitiMortgage’s] interest in the property remains unaffected.”
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The district court’s ruling also instructed CitiMortgage to
“submit an order consistent with this ruling within 10 days.”
¶10 The proposed order stated “that the . . . Trust Deed is a
valid and enforceable encumbrance on the Property with priority
over the interests of the Defendants, and that the . . . Trust Deed is
not affected by the orders entered in the Probate Proceeding.”
(Emphasis added.) Defendants’ counsel approved the order as to
form, and the district court signed it. Defendants appealed this
order.
¶11 Defendants also filed a rule 60(b) motion challenging
the order. See Utah R. Civ. P. 60(b). Their motion argued that the
order as proposed, approved, and entered went too far—that
because the only question before the court was the enforceability
of the order of the probate court invalidating the Trust Deed, the
district court erred by not only setting aside that order but also
by adjudicating the priority of the Trust Deed. In light of the
notice of appeal, the district court did not rule on the rule 60(b)
motion. However, we stayed the appeal and remanded the case
to give the district court the opportunity to rule on the motion.
¶12 On remand, the district court ruled that its earlier order
was “clear and unambiguous” and focused on “the effect and
import of the Probate Court Orders.” Defendants filed a second
notice of appeal from the district court’s order disposing of the
rule 60(b) motion. We consolidated the appeals.
ISSUES AND STANDARD OF REVIEW
¶13 Defendants contend that the district court erred by failing
to rule that CitiMortgage’s claims were barred by res judicata.
Defendants also contend that the order signed by the district
court is ambiguous as to whether it adjudicates the priority of
CitiMortgage’s interest in the Property. “An appellate court
reviews a trial court’s legal conclusions and ultimate grant or
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denial of summary judgment for correctness and views the facts
and all reasonable inferences drawn therefrom in the light most
favorable to the nonmoving party.” Orvis v. Johnson, 2008 UT 2,
¶ 6, 177 P.3d 600 (citations and internal quotation marks
omitted).
ANALYSIS
I. Res Judicata
¶14 Defendants contend that the district court “erred in
finding that [CitiMortgage] was not bound by the Orders of the
Probate Court[,] because claim preclusion and issue preclusion
can act to bar a party from asserting claims or issues that have
been fully litigated in prior proceedings.”
¶15 “Res judicata embraces two distinct doctrines: claim
preclusion and issue preclusion.” Conder v. Hunt, 2000 UT App
105, ¶ 9, 1 P.3d 558 (citing Madsen v. Borthick, 769 P.2d 245, 247
(Utah 1988)). Claim preclusion, the branch of res judicata relied
upon by Defendants here, “operates as a complete bar to a
second action based on a claim that was (or could have been)
raised in a prior action.” Id. Claim preclusion and issue
preclusion share a common requirement that the party to be
bound was either a party to or in privity with a party to the
earlier proceeding. See Moss v. Parr Waddoups Brown Gee &
Loveless, 2012 UT 42, ¶¶ 21, 23, 285 P.3d 1157. “The legal
definition of a person in privity with another, is a person so
identified in interest with another that he represents the same
legal right.” Searle Bros. v. Searle, 588 P.2d 689, 691 (Utah 1978);
see also Hansen v. Bank of N.Y. Mellon, 2013 UT App 132, ¶¶ 7, 10,
303 P.3d 1025.
¶16 Here, Defendants assert that John was in privity with
CitiMortgage “because of their mutual and/or successive alleged
rights to property.” CitiMortgage responds that this issue is
20110771-CA 5 2015 UT App 205CitiMortgage v. Stephenson
unpreserved and that, in any event, CitiMortgage was not in
privity with John.
¶17 We first consider preservation. CitiMortgage asserts that
Defendants argued below only that CitiMortgage was not a
necessary party to the probate proceeding, but never argued that
CitiMortgage was in privity with John and thus bound even if it
was a necessary party. Defendants respond, “While these
arguments may not have been as clearly set out as might be
hoped, evidence on all necessary elements [was] before the
District Court.” We agree with CitiMortgage that the issue of res
judicata was not preserved below.
¶18 It is well settled that “claims not raised before the trial
court may not be raised on appeal.” State v. Holgate, 2000 UT 74,
¶ 11, 10 P.3d 346. To preserve an issue for appeal, a defendant
“must enter an objection on the record that is both timely and
specific.” State v. Rangel, 866 P.2d 607, 611 (Utah Ct. App. 1993).
“The objection must be specific enough to give the trial court
notice of the very error of which [the party] complains.” State v.
Bryant, 965 P.2d 539, 546 (Utah Ct. App. 1998) (citation and
internal quotation marks omitted). Thus, to be preserved for
appeal, an issue “must be presented to the trial court in such a
way that the trial court has an opportunity to rule on that issue.”
438 Main St. v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801(citation and internal quotation marks omitted).
¶19 Having reviewed the arguments presented to the district
court, we conclude that Defendants did not give the court the
opportunity to rule on res judicata in general or privity in
particular. The gist of Defendants’ claim was that CitiMortgage
was “not a necessary or interested party in the probate
proceeding.” In support of this claim, they argued that
CitiMortgage “had no interest in the subject of the Probate
Proceeding” and indeed had “no standing or ability to contest
the competence evaluation of Eugene Stephenson and had no
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ability under the law to avoid the resulting invalidation of the
CitiMortgage lien.”
¶20 Defendants’ district-court claim that CitiMortgage had no
interest in the subject of the probate proceeding would not have
alerted the district court to Defendants’ appellate claim that
CitiMortgage not only had an interest in the subject of the
probate proceeding, but that its interest was identical to John’s
interest, the validity of which was the central issue in the
proceeding. Unsurprisingly, the district court did not discuss or
rule on privity or res judicata. In sum, Defendants’ claim was not
preserved in the district court and thus is not properly before us
on appeal. We reject it on that ground. 2
2. In any event, Defendants have not carried their burden of
demonstrating that John was so identified in interest with
CitiMortgage as to represent the same legal right. See Searle Bros.
v. Searle, 588 P.2d 689, 691 (Utah 1978). The probate court first
determined that Eugene’s incompetency rendered the Warranty
Deed—conveying the Property from the Trust to John—void ab
initio. Six months later, the probate court addressed the question
of whether the Trust Deed was invalid as a consequence of the
Warranty Deed determination. Even if John’s interest and
CitiMortgage’s interest coincided for the first determination,
they certainly did not for the second: John had no interest in
defending the validity of the Trust Deed. Moreover, Defendants
have not persuasively distinguished Utah cases holding that a
mortgagor and mortgagee are not in privity. See Bennion Ins. Co.
v. 1st OK Corp., 571 P.2d 1339, 1340–41 (Utah 1977) (holding that
prior judgment rescinding deed to mortgagor did not bind
mortgagee in later foreclosure action); Conder v. Hunt, 2000 UT
App 105, ¶ 10 n.8, 1 P.3d 558 (holding that mortgagor’s interests
were not so closely identified with those of mortgagee in a prior
collection action as to put them in privity); see also 50 C.J.S.
(continued…)
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II. Priority
¶21 Defendants contend that the district court’s order either
did not resolve the question of priority or resolved the question
improperly.
A. The District Court’s Order Is Unambiguous.
¶22 First, Defendants contend that the district court’s order is
ambiguous “because it is subject to two plausible constructions
on its face.”
¶23 “[T]he language in the court’s final written order controls,
and we will presume the order is correct unless affirmatively
shown otherwise.” Evans v. State, 963 P.2d 177, 180 (Utah 1998)
(holding that the final written order controlled where a
discrepancy existed between that order and the language used
by the court at the hearing); see also M.F. v. J.F., 2013 UT App 247,
¶ 6, 312 P.3d 946 (same). But where an order is subject to two or
more plausible constructions, the ambiguity “is corrected by
adopting the construction ‘which will make the judgment more
reasonable, effective, conclusive, and . . . which brings the
judgment into harmony with the facts and the law.’” Progressive
Acquisition, Inc. v. Lytle, 806 P.2d 239, 243 (Utah Ct. App. 1991)
(quoting Moon Lake Water Users Ass’n v. Hanson, 535 P.2d 1262,
1264 (Utah 1975)).
¶24 We therefore consider the relevant portion of the district
court’s final written order:
(…continued)
Judgments § 1148 (2009) (“A judgment in an action against a
mortgagor is not binding on the mortgagee unless he or she was
made a party to the action, or actively participated in the
litigation, or the judgment was rendered prior to the execution of
the mortgage.”).
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4. The Court having ruled that Plaintiff’s interest in
the Property was not affected by certain orders
entered [in the Probate Proceeding], on the ground
that Plaintiff was not a party to the Probate
Proceeding, the Court grants judgment in favor of
Plaintiff CitiMortgage, Inc., that the [Trust Deed] is
a valid and enforceable encumbrance on the
Property with priority over the interests of the
Defendants, and that the [Trust Deed] is not
affected by the orders entered in the Probate
Proceeding . . . .
....
5. . . . The Court grants judgment to Plaintiff
CitiMortgage, Inc., that the [Trust Deed in favor of
CitiMortgage] has priority over the [Trust Deed in
favor of the Tipton Family Trust] with respect to
the Property.
Defendants’ counsel did not object to any portion of the written
order and approved it as to form. And in ruling on Defendants’
rule 60(b) motion, the district court stated that the order “is clear
and unambiguous, and no further clarification of the Order is
appropriate.”
¶25 Defendants now argue that the written order is
“ambiguous because it is subject to two plausible constructions.”
According to Defendants, the language of the order may be read
either as a final adjudication on the priority of the parties’
interests or as “returning the parties to the status quo prior to the
[probate court’s orders], without adjudicating the competency
and validity issues.” We do not agree.
¶26 The written order explicitly states that “the CitiMortgage
Trust Deed is a valid and enforceable encumbrance on the
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Property with priority over the interests of the Defendants.”
(Emphasis added.) 3 We do not discern any ambiguity in the
plain language of the order, nor do we detect any indication that
the district court intended this portion of the order to be
anything but a final adjudication on priority.
B. The District Court Properly Adjudicated Priority.
¶27 Defendants next argue that if—as we have concluded—
the district court determined the relative priority of the parties’
interests, the court erred. Specifically, they argue that (1) “the
question of priority is not addressed at all in the District Court’s
analysis in the Written Ruling,” (2) “no findings of fact or
conclusions of law . . . support an interpretation” that the district
court adjudicated the priority of the parties’ interests, and (3)
Defendants were “not required to file a counterclaim to
invalidate the Trust Deed in order to oppose Citi[Mortgage]’s
claim for declaratory relief regarding the issue of priority.”
¶28 The priority question was squarely presented to the
district court. The complaint alleged that CitiMortgage was not
bound by the probate court’s orders and that CitiMortgage’s
trust deed enjoyed priority because it was recorded earlier than
the other deeds at issue. In its motion for summary judgment,
CitiMortgage asserted that its trust deed had priority over the
Tipton trust deed based on the order of recording. It relied on
the principle that “priority is given to that document which is
recorded before another that asserts the same interest.” Anderson
v. American Sav. & Loan, 668 P.2d 1253, 1254 (Utah 1983) (per
3. The order also “grants judgment to Plaintiff CitiMortgage,
Inc., that the [Trust Deed in favor of CitiMortgage] has priority
over the [Trust Deed in favor of the Tipton Family Trust] with
respect to the Property.”
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curiam). 4 The motion attached copies of the Trust Deed,
recorded in 2007, and the Tipton trust deed, recorded in 2010. 5
¶29 Defendants did not dispute these facts. They argued
rather that “it is inconsequential whether the CitiMortgage lien
was recorded prior to the Norma Tipton interest where the
CitiMortgage Trust Deed is invalid nunc pro tunc” based on the
orders of the probate court. They asserted that if the district
court were to vacate the orders of the probate court, “a genuine
issue of material fact exists as to the findings of the probate court
as they pertain [to] the CitiMortgage [trust deed], and a factual
determination of rights is necessary, thereby precluding
summary judgment.” However, Defendants did not submit any
affidavit, deposition testimony, or prior in-court testimony
challenging the Warranty Deed from Eugene Stephenson to John
Stephenson or contesting Eugene Stephenson’s competency.
¶30 Accordingly, at the hearing on the motion, counsel for
CitiMortgage stated, “Since there is no claim in this proceeding
that the trust deed should be avoided, or that the Warranty Deed
4. In Utah Farm Production Credit Ass’n v. Wasatch Bank of Pleasant
Grove, 734 P.2d 904 (Utah 1986), our supreme court disavowed as
incomplete the language that CitiMortgage relies on from
Anderson v. American Savings & Loan, 668 P.2d 1253 (Utah 1983).
The court stated, “Our recording act is a race-notice statute
which requires lack of actual notice or of prior recording for a
subsequent purchaser to prevail in multiple conveyances of the
same land.” Utah Farm Prod. Credit Ass’n, 734 P.2d at 906 n.2.
Actual notice is not at issue in this case.
5. We note that recordation of a document creates the
presumption that “the person executing the document was
neither incompetent nor a minor at any relevant time.” Utah
Code Ann. § 57-4a-4(1)(c) (LexisNexis 2010).
20110771-CA 11 2015 UT App 205CitiMortgage v. Stephenson
[from] Eugene Stephenson was invalid as against CitiMortgage,
then we are further entitled to an order stating that we have
priority over the Tipton trust deed which came well after the
fact.” Defendants’ counsel responded that Eugene Stephenson
“was declared by [the probate court] to be incompetent.”
¶31 With the dispute thus framed, the district court ruled
(1) that the orders of the probate court were unenforceable
against CitiMortgage, (2) that the Trust Deed was “a valid and
enforceable encumbrance on the Property,” and (3) that the Trust
Deed enjoyed “priority over the Tipton Trust Deed.” On
remand, in denying Defendants’ rule 60(b) motion, the district
court further clarified its ruling. It explained that the dispute
before it centered on the effect of the probate court’s orders: “no
party raised any legal or factual dispute with respect to the effect
of recording,” nor did the filings before the court “raise the issue
of incompetency of Eugene Stephenson”; accordingly, the
district court had no occasion to rule on that issue.
¶32 In light of this record, we cannot agree with Defendants
that “the question of priority is not addressed at all in the
District Court’s analysis in the Written Ruling.” Furthermore,
while Defendants are technically correct that the district court
entered no findings of fact in support of its ruling on priority,
none were required: “[B]y definition, cases decided on summary
judgment do not resolve factual disputes.” Schurtz v. BMW of N.
Am., Inc., 814 P.2d 1108, 1111 (Utah 1991). Summary judgment is
appropriate only “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.” Utah R. Civ. P. 56(c).
¶33 We agree with Defendants that they were not required to
“file a counterclaim to invalidate the [Trust Deed] in order
to oppose Citi[Mortgage]’s claim for declaratory relief regarding
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the issue of priority.” But where, as here, a motion for summary
judgment is supported by evidence, “an adverse party may not
rest upon the mere allegations or denials of the pleadings,” but
“must set forth specific facts showing that there is a genuine
issue for trial. Summary judgment, if appropriate, shall be
entered against a party failing to file such a response.” Id.R. 56(e). Accordingly, Defendants were required to set forth
specific facts showing that a genuine issue of material fact
existed as to the validity of the Trust Deed. While the vacated
probate court orders might have made the existence of such an
issue seem obvious, those orders were unenforceable as to
CitiMortgage. And under rule 56, the court was required
to determine whether “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any,” show a genuine issue of material fact. Id.R. 56(c). Plainly they did not.
¶34 In sum, we conclude that the district court properly and
unambiguously adjudicated the relative priority of the parties’
trust deeds on summary judgment. No factual findings were
required.
CONCLUSION
¶35 The district court correctly ruled that CitiMortgage was
not bound by the probate court orders. The district court also
correctly adjudicated the issue of priority.
¶36 Affirmed.
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