2010-1 RADC/CADC Venture, LLC v. Dos Lagos, LLC
408 P.3d 313
Utah2017Background
- America West bank loaned Dos Lagos, LLC and Mellon Valley, LLC $2.5M secured by real property; three guarantors signed personal guarantees.
- America West sold a 52% participation in the loan to Utah First; America West retained 48%. The loan allowed sale/participation and stated purchasers could enforce the loan.
- FDIC closed America West in 2009 and later sold America West’s retained 48% interest to 2010-1 RADC/CADC Venture, LLC (RADC). RADC acquired the deed assignment and later purchased the mortgaged property at trustee’s sale, producing a large deficiency.
- Utah First filed a deficiency action within the three‑month statutory window after the trustee’s sale but named only Utah First as plaintiff and misstated the total payoff amount. Dos Lagos moved to dismiss, claiming Utah First was not the real party in interest.
- Utah First amended (with Dos Lagos’s stipulation) to add RADC more than three months after the sale; later the parties corrected the total indebtedness. The district court granted summary judgment to RADC for the full deficiency; the court of appeals affirmed; Utah Supreme Court granted certiorari.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether adding RADC after the 3‑month statutory period is barred by statute of limitations or relates back under Utah R. Civ. P. 15(c) | RADC/Utah First: The amended complaint relates back because the claim arises from the same loan/transaction and Dos Lagos had notice. | Dos Lagos: RADC was not a party within three months of the sale; adding RADC after the limitations period is time‑barred and substitution of parties cannot be cured by relation back. | Held: Amendment adding RADC relates back under Rule 15(c); no prejudice shown and identity of interest (co‑holders of same note) provided sufficient notice. |
| Whether privity/contractual relationship alone supports relation back | RADC/Utah First: Co‑ownership of the single note and foreclosure of the entire property put Dos Lagos on notice RADC’s interest could be pursued. | Dos Lagos: Privity alone is insufficient; being sued by one creditor doesn't put debtor on notice that another creditor will sue. | Held: Privity alone insufficient generally, but here the relationship (successor co‑holder of the same note and foreclosure of entire collateral) gave adequate notice—identity of interest satisfied. |
| Whether Dos Lagos was prejudiced by late addition of RADC | RADC/Utah First: Dos Lagos stipulated to first amendment and identified no prejudice from delayed addition; discovery and defenses were not impaired. | Dos Lagos: Late addition deprived them of timely notice and harmed defense. | Held: No prejudice shown; Dos Lagos made no showing of changed discovery, lost evidence, or altered defense strategy. |
| Whether RADC may recover the full deficiency (100%) rather than only its 48% share | RADC: As successor holder of an enforceable note and deed, RADC may seek the full deficiency subject to any allocation with Utah First. | Dos Lagos: Awarding RADC the full deficiency yields an impermissible windfall; RADC should be limited to its proportional share. | Held: Court of appeals’ award affirmed; Dos Lagos failed to carry burden of persuasion on appeal—briefing inadequately developed a competing contract interpretation. |
Key Cases Cited
- Doxey-Layton Co. v. Clark, 548 P.2d 902 (Utah 1976) (rule 15(c) generally does not allow substitution/addition of parties absent relation‑back showing, but identity‑of‑interest exception exists)
- VCS, Inc. v. Utah Cmty. Bank, 293 P.3d 290 (Utah 2012) (privity of contract alone insufficient to establish identity of interest for relation back)
- Russell v. Standard Corp., 898 P.2d 263 (Utah 1995) (contractual adoption/incorporation does not automatically create identity of interest for relation back)
- Baldwin Cty. Welcome Ctr. v. Brown, 466 U.S. 147 (U.S. 1984) (Rule 15(c) rationale: notice from original litigation satisfies statute‑of‑limitations policy)
- ASC Utah, Inc. v. Wolf Mountain Resorts, L.C., 309 P.3d 201 (Utah 2013) (appellate courts may decline arguments unsupported by reasoned analysis and legal authority)