BMBT, LLC v. Miller
2014 UT App 64
Utah Ct. App.2014Background
- In 2003 Christopher and Gae Miller signed a promissory note to BMBT for a $60,000 loan and executed a quitclaim deed to BMBT the same day; the first page of the Note (including the property description) was attached to the Deed.
- BMBT later alleged the Millers sold the property to entities owned by their business partners and sued in 2009 to quiet title to the property.
- At a pretrial hearing the court expressed that the documents likely created a mortgage, Defendants orally moved to dismiss under rule 12(b)(6), and BMBT sought leave to amend; the court granted dismissal with prejudice and denied amendment.
- The trial court relied on the Deed and the contemporaneous Note to conclude the instruments created a mortgage (not a conveyance), barring a quiet title claim under Utah law.
- BMBT appealed, arguing the court improperly considered extrinsic documents without converting the motion to one for summary judgment and that the instruments were ambiguous as to intent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court could consider the Deed and Note on a 12(b)(6) motion without converting to summary judgment | BMBT: Deed/Note are outside pleading; conversion was required before consideration | Defs: Deed was referenced/central to claim; Note was public record judicially noticeable | Court: Allowed consideration — Deed was implicit/central and Note was judicially noticeable; no conversion required |
| Whether the Deed and Note unambiguously created a mortgage rather than an outright conveyance | BMBT: Documents ambiguous; parol evidence admissible to show intent to convey title | Defs: Deed + contemporaneous Note unambiguously show security interest — lien theory applies | Court: Read together, documents unambiguously create a mortgage; quiet title barred |
| Whether a quiet-title action may be based on a mortgage | BMBT: N/A (challenged characterization) | Defs: Quiet Title Act precludes quiet-title actions premised on mortgages | Court: Utah Code bars quiet-title claims based on mortgages; dismissal proper |
| Whether dismissal with prejudice and denial to amend was premature without extrinsic evidence | BMBT: Ambiguity requires factfinding; denial of amendment unfair | Defs: Documents dispositive; amendment would not cure defect | Court: Documents dispositive as a matter of law; dismissal affirmed |
Key Cases Cited
- Oakwood Vill. LLC v. Albertsons, Inc., 104 P.3d 1226 (Utah 2004) (documents referenced in complaint and central to claim may be considered on a motion to dismiss)
- Bybee v. Stuart, 189 P.2d 118 (Utah 1948) (lien theory: deed given for security treated as mortgage when contemporaneous agreement shows security intent)
- Winegar v. Froerer Corp., 813 P.2d 104 (Utah 1991) (parol evidence admissible in equity to show an absolute deed was intended as a mortgage)
- Glauser Storage, LLC v. Smedley, 27 P.3d 565 (Utah Ct. App. 2001) (if contemporaneous documents unambiguously indicate intent, parol evidence unnecessary)
- Stahl v. United States Dep’t of Agric., 327 F.3d 697 (8th Cir. 2003) (federal courts may take judicial notice of public records on motions to dismiss)
- Daines v. Vincent, 190 P.3d 1269 (Utah 2008) (court must determine whether contract is facially ambiguous before admitting extrinsic evidence)