Fadel v. Deseret First Credit Union
405 P.3d 807
Utah Ct. App.2017Background
- The Trust hired attorney George Fadel; fee agreement entitled Fadel to one-half of recovery over $10,000 and potentially a share of property recovery.
- Deseret First sued the Trust to quiet title; the Trust settled and conveyed the property to Deseret First for $30,000; Deseret First recorded the general warranty deed on Oct. 21, 2011.
- Fadel recorded a notice of attorney’s lien on the property three days later (Oct. 24, 2011) and filed it in court; Judge Hamilton in the quiet-title case ruled the recorded notice was defective and void ab initio and entered other sanctions against Fadel; that decision was affirmed on appeal.
- After the quiet-title case closed, Fadel sued Deseret First to foreclose his attorney’s lien and to recover an interest in the property and rents; Deseret First moved to dismiss and sought fees, arguing the lien could not take priority because it was recorded after Deseret First’s deed and the claims were already adjudicated.
- The district court (Hyde) treated the motion as one for summary judgment, held Fadel had no enforceable lien against Deseret First’s real property (because Fadel recorded after Deseret First and the Trust no longer owned the property), dismissed with prejudice, and awarded Deseret First $2,000 under the bad-faith attorney fees statute.
- The Court of Appeals affirmed dismissal and the fee award, and remanded only to calculate appellate fees for Deseret First.
Issues
| Issue | Plaintiff's Argument (Fadel) | Defendant's Argument (Deseret First) | Held |
|---|---|---|---|
| Whether the district court properly treated the dismissal motion as summary judgment | Motion to dismiss was improper to convert; only pleadings existed | Rule 12 permits treating dismissal as summary judgment when the court considers matters outside the complaint | Court correctly treated motion as summary judgment under Utah R. Civ. P. 12(b) and 56 |
| Whether Fadel’s attorney’s lien attached to the real property and had priority over Deseret First’s deed | Lien existed and was enforceable; Deseret First had actual notice so lien should bind | Lien was recorded after Deseret First recorded the deed; therefore it could not have priority | Lien was unenforceable as to the real property because Fadel recorded after Deseret First and the Trust no longer owned the property |
| Whether actual notice to Deseret First makes the lien effective against real property despite late recording | Actual notice makes the lien binding even if recorded later | For real property, priority is governed by recording time; actual notice only matters for non‑real property under the statute | Actual notice does not defeat the recording-based priority rule for real property; recording controls |
| Whether the action was without merit and brought in bad faith (fee award) | Fadel believed his claims had legal merit and an honest basis | Claims lacked factual basis (lien recorded too late; claims belonged to the Trust and were released); Fadel continued litigation despite prior rulings | Court’s determinations affirmed: claims were without merit and not brought in good faith; fee award upheld |
Key Cases Cited
- Phillips v. Smith, 768 P.2d 449 (Utah 1989) (attorney’s lien is statutory in nature and defined by statute)
- Capital Assets Financial Services v. Lindsay, 956 P.2d 1090 (Utah Ct. App. 1998) (a judgment lien cannot attach to property after it has been sold or conveyed)
- Jeschke v. Willis, 811 P.2d 202 (Utah Ct. App. 1991) (standard of review and that a bad-faith finding is a factual determination reviewed for clear error)
- Migliore v. Livingston Financial, LLC, 347 P.3d 394 (Utah 2015) (definition of a claim being “without merit” as frivolous or having little weight)
- Bresee v. Barton, 387 P.3d 536 (Utah Ct. App. 2016) (a statutory basis alone is insufficient; claims require a factual basis to be meritorious)