424 P.3d 1075
Utah Ct. App.2018Background
- Deleeuw borrowed $224,000 in 2003 via a signed promissory note (the Note) secured by a deed of trust on his house; Nationstar is the Note holder.
- Deleeuw stopped paying in August/September 2008 and remained in default thereafter.
- Trustee substitution errors occurred in 2013–2014; notices of default were filed in 2014 (two canceled) and February 2016 (which accelerated the Note).
- Nationstar attempted foreclosure in July 2016; Deleeuw sued to enjoin foreclosure, quiet title, and for declaratory relief, arguing the six-year statute of limitations had expired.
- The district court dismissed the complaint, concluding the UCC statute of limitations (triggered by acceleration) governed and had not expired; Deleeuw appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statute of limitations governs foreclosure on a deed of trust securing a promissory note? | Section 78B-2-309 (six years for written instruments); limitations ran from first missed payment (2008). | UCC § 3-118(1) (six years for notes); limitations run from the accelerated due date (Feb 2016). | UCC statute controls as the more specific rule; limitations began at acceleration in Feb 2016. |
| Is the Note a negotiable instrument subject to the UCC? | Deleeuw: deed of trust/real‑property context means UCC inapplicable. | Nationstar: the Note meets negotiability elements and is governed by the UCC regardless of the deed of trust. | The Note is negotiable under UCC § 3-104(1); UCC governs enforcement. |
| Do prior decisions that treat deeds of trust as outside the UCC control here? | Deleeuw relies on Bevan v. Boyce to argue UCC does not apply to trust deeds. | Nationstar: Bevan is about real‑property regulation, but §57-1-34 ties foreclosure timing to the limitations on the underlying obligation (the Note). | Bevan is distinguishable; §57-1-34 requires using the limitations on the underlying obligation (the Note), so UCC applies. |
| Was foreclosure time‑barred when Nationstar sought it in 2016? | Deleeuw: limitations expired in 2014 if measured from first default. | Nationstar: limitations had not expired because they began in Feb 2016 upon acceleration. | Limitations had not expired; foreclosure not time‑barred. |
Key Cases Cited
- State v. Hamilton, 70 P.3d 111 (Utah 2003) (standard of review for motions to dismiss)
- Millett v. Clark Clinic Corp., 609 P.2d 934 (Utah 1980) (more specific statutory provision governs over a general one)
- Perry v. Pioneer Wholesale Supply Co., 681 P.2d 214 (Utah 1984) (UCC limitation period controls over older general statute when UCC sets a specific period)
- Calfo v. D.C. Stewart Co., 717 P.2d 697 (Utah 1986) (an instrument's negotiability must be determined from its face)
- Goldenwest Federal Credit Union v. Kenworthy, 406 P.3d 253 (Utah Ct. App. 2017) (statute of limitations for written instruments generally runs from breach)