Pierucci v. U.S. Bank, NA

2015 UT App 80THE UTAH COURT OF APPEALS
ADAM PIERUCCI AND LISA PIERUCCI,
Plaintiffs and Appellants,
v.
U.S. BANK, NA AND WELLS FARGO HOME MORTGAGE, INC.,
Defendants and Appellees.
Opinion
No. 20140025-CA
Filed April 2, 2015
Seventh District Court, Price Department
The Honorable Douglas B. Thomas
No. 110700166
Justin D. Heideman, Attorney for Appellants
Amy F. Sorenson, James D. Gardner, and Adam C.
Buck, Attorneys for Appellees
JUDGE JAMES Z. DAVIS authored this Opinion, in which JUDGE
GREGORY K. ORME concurred. JUDGE JOHN A. PEARCE concurred
in the result.
DAVIS, Judge:
¶1 Adam and Lisa Pierucci appeal the district court’s
decision to set aside an entry of default against U.S. Bank, NA
and its grant of judgment on the pleadings in favor of U.S. Bank
and Wells Fargo Home Mortgage, Inc. (collectively, Defendants).
We affirm.
BACKGROUND
¶2 In 2005, the Pieruccis obtained a mortgage loan for the
purchase of real property in Price, Utah. The loan was secured
by a deed of trust, which permitted the lender to foreclose on the
Pierucci v. U.S. Bank
property in the event that the Pieruccis defaulted on their
payments. In 2008, the Pieruccis began to fall behind on their
payments, so they inquired of their lender regarding a loan
modification. According to the Pieruccis, Defendants1 informed
them that they should not make loan payments while in the
process of applying for a modification because doing so “would
prevent [them] from qualifying for a loan modification.” When
the Pieruccis ultimately sought a modification through the
federal Home Affordable Modification Program (HAMP),
Defendants instructed them to make payments for three months
as a “trial period.” Although the Pieruccis made all three trial-
period payments, their last payment was received one day late,
so Defendants rejected the payments. Defendants ultimately
denied the Pieruccis’ request for a loan modification.
¶3 On April 1, 2009, Defendants recorded a notice of default
against the Pieruccis and proceeded to foreclose on the Pieruccis’
property. The Pieruccis filed a complaint on February 22, 2011,
seeking an injunction to prevent the sale of their property. The
district court denied the Pieruccis’ request, and the home was
sold at a foreclosure sale on February 23, 2011.
1. A number of entities were involved in the events leading to
this litigation. When the Pieruccis initially obtained their loan
and executed the trust deed, South Eastern Utah Title was listed
as the trustee, Americor was listed as the lender, and Mortgage
Electronic Registration Systems (MERS) was listed as the
beneficiary. America’s Servicing Company serviced the loan.
Later, the loan was sold to Wells Fargo. MERS assigned its
beneficial interest to U.S. Bank, as trustee for the Structured
Asset Securities Corporation, and U.S. Bank substituted eTitle
Insurance Agency, LLC (eTitle) as trustee. For simplicity, we use
“Defendants” when describing the actions of any one of the
entities above, except where the specific identity of the entity is
relevant.
20140025-CA 2 2015 UT App 80Pierucci v. U.S. Bank
¶4 The Pieruccis’ complaint also alleged various claims
against Defendants, including wrongful foreclosure and quiet
title. Although the complaint was served on U.S. Bank on
February 25, 2011, and U.S. Bank was informed of the service by
the Pieruccis’ counsel, U.S. Bank was unable to locate the
complaint and did not file a timely answer. On March 23, 2011,
at the Pieruccis’ request, the district court entered a default
against U.S. Bank. U.S. Bank filed its answer on March 28 and
moved to have the default certificate set aside. The district court
granted the motion and set aside the default.
¶5 On November 21, 2012, U.S. Bank and Wells Fargo filed a
motion for judgment on the pleadings. See Utah R. Civ. P. 12(c).
The district court granted the motion and dismissed the
Pieruccis’ claims. The Pieruccis appeal.
ISSUES AND STANDARDS OF REVIEW
¶6 First, the Pieruccis assert that the district court erred in
setting aside the default against U.S. Bank. “We review the trial
court’s decision to set aside a default for abuse of discretion.”
Roth v. Joseph, 2010 UT App 332, ¶ 12, 244 P.3d 391.
¶7 Second, the Pieruccis contend that the district court
committed reversible error by considering the HAMP
documents without converting the motion for judgment on the
pleadings to a motion for summary judgment. It is reversible
error for a court to consider material outside the pleadings in
ruling on a motion for judgment on the pleadings unless the
outside material “is referred to in the complaint and is central to
the plaintiff’s claim” or “dismissal can be justified without
considering the outside documents.” Oakwood Vill. LLC v.
Albertsons, Inc., 2004 UT 101, ¶¶ 12–13, 104 P.3d 1226 (citation
and internal quotation marks omitted) (considering a rule
12(b)(6) motion to dismiss for failure to state a claim); see also
BMBT, LLC v. Miller, 2014 UT App 64, ¶¶ 6–7, 322 P.3d 117220140025-CA 3 2015 UT App 80Pierucci v. U.S. Bank
(holding that a district court may also consider outside
documents of which it would be entitled to take judicial notice,
such as public records).
¶8 Finally, the Pieruccis challenge the district court’s
conclusion that they could not establish their wrongful
foreclosure claim. We review the district court’s grant of a
motion for judgment on the pleadings for correctness, affording
no deference to the district court. Mountain Am. Credit Union v.
McClellan, 854 P.2d 590, 591 (Utah Ct. App. 1993). “On appeal
from the grant of a motion for judgment on the pleadings, we
take the factual allegations of the nonmoving party as true,
considering such facts and all reasonable inferences drawn
therefrom in a light most favorable to the [non-moving party+.”
Straley v. Halliday, 2000 UT App 38, ¶ 2, 997 P.2d 338 (alteration
in original) (citation and internal quotation marks omitted).
ANALYSIS
¶9 First, the Pieruccis assert that it was an abuse of discretion
for the district court to set aside the default against U.S. Bank. A
district court has discretion to set aside a default “*f+or good
cause shown.” Utah R. Civ. P. 55(c). Factors relevant to a good
cause determination include “whether the default was willful,
whether the defendant alleges a meritorious defense, whether
the defendant acted expeditiously to correct the default, whether
setting the default aside would prejudice the plaintiff, and the
extent, if any, to which the public interest is implicated.” Roth,
2010 UT App 332, ¶ 16. Because “the law disfavors default
judgments,” Black’s Title, Inc. v. Utah State Ins. Dep’t, 1999 UT
App 330, ¶ 5, 991 P.2d 607, Utah courts are “liberal in granting
relief against default judgments so that cases may be tried on the
merits,” Erickson v. Schenkers Int’l Forwarders, Inc., 882 P.2d 1147,
1149 (Utah 1994). The same principle applies in the context of
determining whether to set aside a default certificate because “a
default certificate is merely a first step towards obtaining a
20140025-CA 4 2015 UT App 80Pierucci v. U.S. Bank
default judgment.” Roth, 2010 UT App 332, ¶ 17 (citation and
internal quotation marks omitted).
¶10 The district court did not exceed its discretion in
determining that good cause justified setting aside the default
certificate. Although U.S. Bank was aware that the Pieruccis
claimed to have served a complaint on its registered agent, U.S.
Bank was unable to locate the complaint. The district court
found that “*t+here was significant correspondence between [the
Pieruccis’+ [c]ounsel and . . . U.S. Bank’s current counsel on
whether . . . U.S. Bank had service of the [c]omplaint.” Although
the Pieruccis assert that U.S. Bank’s awareness of the complaint
indicates that U.S. Bank willfully ignored it, the fact that U.S.
Bank was communicating with the Pieruccis’ attorneys also
suggests that it was diligently working to find and respond to
the complaint. Thus, it was not an abuse of discretion for the
district court to determine that U.S. Bank’s failure was not
willful. The other good cause factors also support the district
court’s decision to set aside the default: U.S. Bank had a
meritorious defense, as demonstrated by the fact that the district
court dismissed the Pieruccis’ claims on the pleadings; U.S. Bank
acted expeditiously to correct the default, filing an answer
within five days of entry of the default certificate; setting aside
the default did not prejudice the Pieruccis because it did not
impair their ability to litigate their claim; and we can discern no
impact of the default on the public interest. Accordingly, we
conclude that it was within the district court’s discretion to set
aside the default.
¶11 The Pieruccis next argue that we should reverse the
district court’s judgment because the court considered the
HAMP documents without converting the motion for judgment
on the pleadings to a motion for summary judgment. See
Oakwood Vill., 2004 UT 101, ¶ 12; see also Utah R. Civ. P. 12(c) (“If,
on a motion for judgment on the pleadings, matters outside the
pleadings are presented to and not excluded by the court, the
20140025-CA 5 2015 UT App 80Pierucci v. U.S. Bank
motion shall be treated as one for summary judgment . . . .”).
Although a district court generally may not consider outside
documents when ruling on a motion for judgment on the
pleadings, “it is not error for the trial court to consider
documents that are referred to in the complaint and [are] central
to the plaintiff’s claim, regardless of whether such documents
were actually included with the complaint.” BMBT, 2014 UT
App 64, ¶ 6 (alteration in original) (citation and internal
quotation marks omitted).
¶12 The Pieruccis’ complaint refers to their HAMP
applications and the HAMP trial period, the terms of which
were outlined in the HAMP documents. Further, the Pieruccis’
complaint asserts that Defendants misrepresented the HAMP
requirements, wrongfully rejected the payments the Pieruccis
made during the trial period, and wrongfully denied the
Pieruccis’ HAMP application. As the district court observed,
these claims are dependent on “*t+he existence and content of the
HAMP documents.” Therefore, the district court correctly
determined that the Pieruccis referred to the HAMP documents
in their complaint and that the documents were central to their
claims. Accordingly, the court did not err in considering the
HAMP documents in ruling on the motion for judgment on the
pleadings.
¶13 Finally, the Pieruccis contend that the district court erred
in concluding that they had not established their wrongful
foreclosure claim.2 They assert that their claim was supported by
2. The Pieruccis do not address the merits of the district court’s
dismissal of their other claims. With respect to those claims, their
request for reversal rests solely on their assertion that the district
court erred in considering the HAMP documents and in setting
aside the default against U.S. Bank.
20140025-CA 6 2015 UT App 80Pierucci v. U.S. Bank
their allegations that Defendants prevented them from
modifying the mortgage by rejecting the trial-period payments
and denying their HAMP application.3
¶14 “A *trustee’s+ sale once made will not be set aside unless
the interests of the debtor were sacrificed or there was some
attendant fraud or unfair dealing.” Concepts, Inc. v. First Sec.
Realty Servs., Inc., 743 P.2d 1158, 1160 (Utah 1987) (per curiam)
(emphasis omitted). Moreover, “the remedy of setting aside a
trustee’s sale is appropriate only in cases which reach unjust
extremes.” Thomas v. Johnson, 801 P.2d 186, 188 (Utah Ct. App.
1990). It is insufficient for the Pieruccis to allege that their
interests in the property were affected; rather, they must allege
that an irregularity in the sale—such as deficient notice or fraud
in connection with the sale—prevented them from protecting
their interest in the property. See RM Lifestyles, LLC v. Ellison,
2011 UT App 290, ¶¶ 16–18, 263 P.3d 1152. Specifically, they
must allege that irregular attendant circumstances prevented
them from protecting their rights or curing their default before
the property was sold. See id. ¶ 18. “Absent such exceptional
circumstances, the proper remedy is to seek an injunction prior
to a sale . . . .”4 Reynolds v. Woodall, 2012 UT App 206, ¶ 15, 285
P.3d 7.
3. The Pieruccis’ complaint alleged irregularity in the sale based
on the fact that U.S. Bank substituted eTitle as trustee before
MERS had recorded an assignment of interest to U.S. Bank. The
district court rejected this argument because it determined that
the Pieruccis had not alleged that they were actually confused or
harmed by the irregularity. The Pieruccis have not renewed this
argument on appeal, focusing instead on their fraud argument.
4. The Pieruccis have not appealed the district court’s denial of
their request for an injunction.
20140025-CA 7 2015 UT App 80Pierucci v. U.S. Bank
¶15 The Pieruccis rely on the connection between Defendants’
rejection of the trial-period payments and the ultimate
foreclosure to argue that Defendants engaged in “unfair
dealing” that reached “unjust extremes.” However, even
assuming that Defendants acted unfairly or fraudulently in
refusing the trial-period payments, their behavior does not
justify setting aside the trustee’s sale, because the trial-period
payments had no connection to the sale itself. See Concepts, 743
P.2d at 1160 (requiring “attendant fraud or unfair dealing”
(emphasis added)); Reynolds, 2012 UT App 206, ¶ 17 (“We look
to the allegations in the amended complaint to determine . . .
whether there was fraud or unfair dealing involved in the sale.”
(emphasis added)). Furthermore, despite any connection
between the rejection of the Pieruccis’ trial-period payments and
the ultimate foreclosure, the Pieruccis cannot establish that they
had any right to receive a HAMP modification and therefore
cannot establish that the Defendants’ refusal of their trial-period
payments and denial of their HAMP application unfairly
precluded them from protecting their interests in the property.
See Blackmore v. Wachovia Mortg. Corp., No. 2:12–CV–250–DN,
2013 WL 504388, at *2 (D. Utah Feb. 8, 2013) (“HAMP *does+ not
entitle [applicants] to a loan modification . . . and Plaintiff cannot
bring claims based on HAMP because HAMP provides no
private right of action.”); see also Miller v. Chase Home Fin., LLC,
677 F.3d 1113, 1116–17 (11th Cir. 2012) (per curiam) (holding that
there is no private right of action under HAMP). The Pieruccis’
“claim is essentially a claim for a HAMP modification,” and
“any claims *they+ may bring under that program must be
dismissed.” See Shurtliff v. Wells Fargo Bank, NA, No. 1:10–CV–
165 TS, 2010 WL 4609307, at *3 (D. Utah Nov. 5, 2010). Thus, the
district court did not err in determining that the Pieruccis could
not establish their wrongful foreclosure claim.
20140025-CA 8 2015 UT App 80Pierucci v. U.S. Bank
CONCLUSION
¶16 We determine that the district court did not exceed its
discretion in setting aside the default against U.S. Bank. We also
determine that the district court did not err in considering the
HAMP documents or in determining that the Pieruccis’
complaint failed to establish a claim for wrongful foreclosure.
Accordingly, we affirm the district court’s decision to set aside
the default against U.S. Bank and its grant of judgment on the
pleadings in favor of Defendants.
20140025-CA 9 2015 UT App 80