2013 UT App 132
Utah Ct. App.2013Background
- Hansen appeals a district court ruling affirming dismissal of his claims as barred by res judicata.
- In May 2010, the Bank purported to act as beneficiary under Hansen’s deed of trust via a Substitution of Trustee naming Bates, and Bates recorded a Notice of Default.
- MERS under the deed assigned the beneficial interest to the Bank in October 2010, after the Substitution of Trustee and Notice of Default had been recorded, and after Hansen’s federal suit had been filed.
- Hansen filed a federal suit in August 2010 seeking declaratory relief challenging ownership/ securitization of the loan; it was dismissed with prejudice in November 2010.
- Hansen later filed this Utah action (January 2011) alleging fraud, negligent misrepresentation, breach of the covenant of good faith and fair dealing, and improper execution of foreclosure; the district court dismissed on res judicata grounds, which the Utah Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bates is in privity with the Bank for res judicata. | Hansen contends Bates isn’t in privity with the Bank since Bates is a trustee, not a beneficiary. | Bank and Bates argue privity exists because both seek foreclosure on the same loan and Bates acts to foreclose for the benefit of the Bank. | Yes; privity exists; Bank and Bates represent the same legal interest. |
| Whether Hansen’s claims could have been raised in the federal suit. | Hansen asserts the claims are based on facts arising after May 2010, not available in the federal action. | Bank and Bates contend the critical facts existed by May 2010 and could have been raised in the federal suit. | Yes; claims could have been raised in the federal action. |
Key Cases Cited
- Mack v. Utah State Dep’t of Commerce, 2009 UT 47 (Utah 2009) (explains claim preclusion elements (same parties, same claim, final judgment))
- In re D.A., 2009 UT 83 (Utah 2009) (defines claim preclusion standards in Utah)
- Brunson v. Bank of N.Y. Mellon, 2012 UT App 222 (Utah App. 2012) (applies privity concept to trustee/beneficiary foreclosures)
- Searle Bros. v. Searle, 588 P.2d 689 (Utah 1978) (principles on privity and related presumptions)