Morris v. Off-Piste Capital LLC
418 P.3d 66
Utah Ct. App.2018Background
- Property in Draper secured by an earlier "Smart Trust Deed" held by Smart Assets; conflicting assignments arose: one to "SS Services, LLC" (recorded Notice of Interest Jan 2007) and later an assignment to Capital 360 (recorded Apr 2, 2007).
- SS Services (found to be a misnomer for Short Sale Services LLC) foreclosed, recorded a trustee’s deed Apr 30, 2007; Capital 360 later foreclosed and its chain led to Off-Piste’s interest (Canyon Vines loaned from Off-Piste recorded Mar 2, 2008).
- Short Sale recorded a Notice of Interest that described the assignment and identified the Smart Trust Deed; Capital 360 recorded its assignment before Short Sale recorded the assignment itself but after the Notice of Interest.
- At trial the district court concluded: SS Services was a misnomer for Short Sale; the SS/Short Sale assignment was valid; Capital 360 was not a bona fide purchaser because the recorded Notice of Interest imparted constructive notice, so title was quieted in Short Sale (extinguishing Off-Piste’s claim).
- Separately, American Home Mortgage (AHM) claimed a mortgage-related interest via Castle & Cooke/MERS but was not named or served in the quiet-title action; a default entered against MERS. The district court held the default bound AHM; AHM cross-appealed.
- The Court of Appeals affirmed the quieting of title in Short Sale but reversed the summary judgment against AHM, holding a default against MERS did not bind a known but unnamed/unspecified claimant (AHM) under Utah’s quiet-title statute.
Issues and Key Cases Cited
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "SS Services, LLC" on the assignment is a misnomer for Short Sale Services LLC | Short Sale: the misnamed assignee was reasonably identifiable (shorthand), so the assignment validly conveyed title | Off-Piste: naming a non-existent entity voids the conveyance; misnomer doctrine inapplicable | Court: misnomer applies—identity was reasonably clear (address, conduct, lack of confusion); assignment valid. |
| Whether Capital 360 was a bona fide purchaser entitled to priority by recording first | Off-Piste/Capital 360: recorded assignment first, so takes priority under race-notice statute | Short Sale: recorded Notice of Interest imparted constructive notice; Capital 360 lacked good faith | Court: Capital 360 had constructive (record) notice from Short Sale’s Notice of Interest and was not a BFP; Short Sale’s interest prevails. |
| Whether a Notice of Interest must correctly name the assignor to impart constructive notice | Off-Piste: Notice misnamed Brian Smart (individual) vs. Smart Assets (company); thus it was a defective/wild document and did not impart notice | Short Sale: notice statute requires nature of claim and legal description; naming the assignor is not required; Notice here properly described the claim and property | Court: Notice satisfied statutory requirements; misnaming assignor irrelevant; it imparted constructive notice. |
| Whether default judgment against MERS bound AHM (successor/claimant) | Off-Piste: default against MERS extinguished claims of those claiming through MERS, including AHM | AHM: it was a known claimant not named or served, so default against MERS does not bind AHM under quiet-title statute | Court: reversed summary judgment vs. AHM—quiet-title judgments bind only persons named and served (or unknown served by publication); a known but unnamed party (AHM) was not bound. |
Key Cases Cited
- Julian v. Petersen, 966 P.2d 878 (Utah Ct. App. 1998) (misnomer doctrine—conveyance to nonexisting entity may be treated as valid if identity ascertainable)
- Kelly v. Hard Money Funding, Inc., 87 P.3d 734 (Utah Ct. App. 2004) (misnomer analysis focuses on whether identity of corporation is reasonably clear)
- Hartman v. Potter, 596 P.2d 653 (Utah 1979) (deed construction aims to effectuate parties’ intent)
- Pioneer Builders Co. of Nevada v. K D A Corp., 292 P.3d 672 (Utah 2012) (race-notice rule; bona fide purchaser requires no notice of prior unrecorded interest)
- Sterling Fiduciaries LLC v. JPMorgan Chase Bank NA, 372 P.3d 741 (Utah Ct. App. 2016) (known claimants cannot be treated as "unknown" for service by publication; must be named to be bound by quiet-title judgment)