Bank of America v. Adamson
2017 UT 2
| Utah | 2017Background
- Samuel Adamson defaulted on a 2007 deed of trust; ReconTrust (successor trustee) recorded notice of default and conducted a nonjudicial foreclosure sale in 2010 that transferred title to BAC Home Loans (later Bank of America), which then sold to Distressed Asset. Adamsons remained in possession.
- Adamsons did not contact ReconTrust before the sale, did not seek an injunction, and made no payments after default. ReconTrust’s notice included a phone number.
- Adamsons defended a 2014 unlawful-detainer action by arguing the trustee’s sale was invalid because ReconTrust lacked a Utah physical office as required by Utah Code § 57-1-21 (a point previously decided as a qualification issue in Sundquist).
- The district court found the sale void for noncompliance with § 57-1-21 and dismissed the unlawful-detainer action; the Supreme Court reviewed on appeal.
- The Supreme Court declined to overrule Sundquist (insufficient briefing from Bank of America) but held that failure to satisfy § 57-1-21 does not automatically void a trustee’s deed; a post-sale challenge requires a showing of prejudice or fraud to render a deed voidable.
- Because Adamsons failed to show prejudice or fraud (and had not attempted pre-sale remedies), the trustee’s deed was neither void nor voidable and the district court’s dismissal was reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sundquist should be overruled via National Bank Act preemption | Sundquist was wrongly decided; national banks’ power of sale preempts state trustee-qualification rules | Maintain Sundquist; Bank did not adequately brief reasons for overruling | Court declined to overrule Sundquist due to inadequate briefing by Bank of America |
| Legal effect of trustee lacking a Utah office under § 57-1-21 | Lack of a qualified trustee renders sale and trustee’s deed void ab initio | Noncompliance does not automatically void deed; remedy depends on prejudice/fraud | Noncompliance alone does not void deed; need analysis whether deed is void, voidable, or valid |
| Standard for setting aside a trustee’s deed after sale | Sale should be set aside for failure to meet statutory trustee requirements | Post-sale challenge requires showing of prejudice or fraud; otherwise deed stands | To set aside a sale post-sale, trustor must show prejudice or fraud; absent that deed is valid |
| Appropriateness of dismissal of unlawful-detainer action | Dismiss because trustee’s deed void for trustee nonqualification | Dismissal improper because deed not void/voidable; Adamsons lacked prejudice evidence | Dismissal was error; case remanded for further proceedings |
Key Cases Cited
- Federal Nat’l Mortg. Ass’n v. Sundquist, 311 P.3d 1004 (Utah 2013) (addressed trustee qualification under § 57-1-21 but left effect on sale undecided)
- Concepts, Inc. v. First Sec. Realty Servs., Inc., 743 P.2d 1158 (Utah 1987) (sale will not be set aside absent sacrifice of debtor’s interests, fraud, or unfair dealing)
- Ockey v. Lehmer, 189 P.3d 51 (Utah 2008) (distinguishes void vs. voidable deeds; only conveyances that offend public policy are void ab initio)
- Blodgett v. Martsch, 590 P.2d 298 (Utah 1978) (recitals in trustee’s deed protect bona fide purchasers; statutes favor finality of trustee’s deeds)