423 P.3d 1247
Utah2017Background
- In 2003 JDJ bought two commercial parcels financed by two trust deeds: First National (first recorded) and Palmer (second recorded). A re-recording error in 2004 made Palmer appear first in priority.
- JDJ defaulted; litigation followed. The district court granted summary judgment to First National, reinstating its original deed and authorized foreclosure; no stay of that order was obtained by Palmer.
- First National conducted a trustee’s sale in August 2011, purchased Parcel 2, and later conveyed it to Black Oil; Black Oil sold Parcel 2 to 2DP Blanding in July 2013.
- Palmer appealed the district court’s order in 2011 but never obtained a supersedeas/stay or recorded a lis pendens; the Court of Appeals later reversed the reinstatement of First National’s deed.
- After 2DP’s purchase (and recording of its deed), 2DP sued to quiet title and enjoin Palmer’s foreclosure; the district court held 2DP (and Black Oil) were bona fide purchasers and granted summary judgment to 2DP.
Issues
| Issue | Palmer's Argument | 2DP/Black Oil's Argument | Held |
|---|---|---|---|
| Does an appeal of an unstayed foreclosure order create a cloud on title that binds subsequent purchasers? | Appeal preserves Palmer’s interest; subsequent purchasers should take property subject to appeal/inquiry notice. | An unstayed order is enforceable; lawful purchasers obtain title free of the appellant’s interest unless appellant prevented sale. | An appeal without stay does not cloud title. Purchasers who lawfully acquire the property while the order is enforceable take free and clear if appellant did not obtain a stay or record a lis pendens. |
| Were Black Oil and 2DP on inquiry/constructive notice such that they took subject to Palmer’s appeal? | Recording of the foreclosure order should have put purchasers on inquiry notice to check the court docket and discover Palmer’s appeal. | The recorded order alone did not impose a duty to investigate the docket; purchasers had no actual or sufficient inquiry notice. | Purchasers had no duty to investigate the docket; their lack of knowledge does not revive Palmer’s rights where he failed to get a stay or record a lis pendens. |
| Did First National’s failure to include required information in the judgment registry filing invalidate the foreclosure’s effect on title? | The omission in filing under the judgment-registry statute (Utah Code §78B-5-201) prevented the order from affecting title. | The judgment-registry statute governs monetary judgment liens, not an order adjudicating lien priority and authorizing foreclosure; recording under the land-recording statute (Utah Code §57-3-102) sufficed. | The registry statute did not apply; the recorded foreclosure order under the recording statute imparted notice and properly affected title. |
| Can 2DP be collaterally estopped from challenging whether Palmer’s interest survived the foreclosure based on the Court of Appeals’ earlier decisions? | Court of Appeals’ prior opinions (and a judge’s concurrence) effectively reinstated Palmer’s lien; 2DP should be bound. | The earlier opinions did not contain a final, definitive adjudication of that specific issue; no full, final litigation on that precise question occurred. | Collateral estoppel does not apply: the issue was not decided by a final judgment on the merits and earlier opinions were ambiguous. |
Key Cases Cited
- Heslop v. Bear River Mut. Ins. Co., 390 P.3d 314 (Utah 2017) (standard of review for summary judgment cited)
- Cheves v. Williams, 993 P.2d 191 (Utah 1999) (unstayed judgments remain enforceable during appeal)
- Skeen v. Pratt, 48 P.2d 457 (Utah 1935) (an unstayed order is enforceable as if no appeal taken)
- Franklin Fin. v. New Empire Dev. Co., 659 P.2d 1040 (Utah 1983) (appellants may recover proceeds but cannot retroactively prevent a lawfully executed sale when no stay obtained)
- Richards v. Baum, 914 P.2d 719 (Utah 1996) (stressing requirement of obtaining a stay to prevent enforcement and noting purchaser protection)
- Timm v. Dewsnup, 921 P.2d 1381 (Utah 1996) (purchaser subject to recorded lis pendens takes only the litigant’s interest)
- Hidden Meadows Dev. Co. v. Mills, 590 P.2d 1244 (Utah 1979) (recorded lis pendens binds subsequent purchasers to the litigation’s outcome)